Robinhood accused of offering snafu credits to squelch suit

https://bankinnovation.net/allposts/biz-lines/lending/robinhood-accused-of-offering-snafu-credits-to-squelch-suit/

Robinhood Financial Inc., facing lawsuits over crashes on its trading platform amid violent stock market swings, is now being accused of offering a “$75 goodwill credit” to dupe customers into waiving their legal rights.

Attorneys for users who are suing the beleaguered online brokerage company asked a federal judge in Florida to order Robinhood to stop sending “misleading communications” and to void any releases already signed by customers.

“We view this type of activity by Robinhood as a calculated attempt to wipe out users’ class action claims without informing the users that they can instead participate in the class action should they so choose” lawyer Michael S. Taaffe said in a statement.

Robinhood’s platform has gone down multiple times this month, creating problems for trading equities, options and cryptocurrency. The crashes have set back the Silicon Valley startup, which has been trying to lure young, tech-savvy investors who want to trade entirely online.

Robinhood said in an emailed statement that it’s quickly compensating customers who contact the company on a “case-by-case review.” The company said it aims to compensate customers before the conclusion of the litigation to avoid a long wait. Claims that Robinhood is attempting to block customers from participating in any class action are inaccurate, according to the statement.

— Joel Rosenblatt (Bloomberg)

— With assistance from John Gittelsohn (Bloomberg)

https://bankinnovation.net/allposts/biz-lines/lending/robinhood-accused-of-offering-snafu-credits-to-squelch-suit/

4 business challenges of COVID-19 and solutions to fight them  

https://bankinnovation.net/allposts/biz-lines/payments/4-business-challenges-of-covid-19-and-solutions-to-fight-them/

While financial services companies large and small scramble to cope with the economic fallout of the coronavirus pandemic, there may be a silver lining to the gloom, according to Delos Advisors. The company, which provides guidance to senior management of financial institutions in the Americas, shed light on potential solutions to some of the business implications stemming from the COVID-19 outbreak in a white paper shared …Read More

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https://bankinnovation.net/allposts/biz-lines/payments/4-business-challenges-of-covid-19-and-solutions-to-fight-them/

Umpqua’s Go-To sees usage spike as customers avoid branches 

https://bankinnovation.net/allposts/biz-lines/retail/umpquas-go-to-sees-usage-spike-as-customers-avoid-branches/

Portland-based Umpqua Bank, which has almost $29 billion in assets, is seeing a significant spike in volume on its Go-To app, a digital tool that allows customers to message a banker of their choice. According to Brian Read, Umpqua’s head of retail and small business banking, enrollment on the platform has spiked 30%, while interactions …Read More

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https://bankinnovation.net/allposts/biz-lines/retail/umpquas-go-to-sees-usage-spike-as-customers-avoid-branches/

Weekly Wrap: Coronavirus dislocation continues to rock fintech

https://bankinnovation.net/allposts/operations/comp-reg/weekly-wrap-coronavirus-dislocation-continues-to-rock-fintech/

In a week that saw the coronavirus pandemic amplify in the United
States, the fintech sector continued to weather economic
dislocation and uncertainty. But even amid this uncertainty,
fintech companies began formulating strategies to help banking and
consumers emerge from the crisis with better tools and solutions.
In this WFH roundtable, Bianca Chan, Rick Morgan, […]

https://bankinnovation.net/allposts/operations/comp-reg/weekly-wrap-coronavirus-dislocation-continues-to-rock-fintech/

Digital dollars gain credence, despite exclusion from stimulus bill 

https://bankinnovation.net/allposts/biz-lines/payments/digital-dollars-gain-credence-despite-exclusion-from-stimulus-bill/

While the proposal to distribute digital dollars was struck from the new $2.2 trillion stimulus bill designed to buoy the economy, the proposal alone could accelerate a more widespread adoption of a cryptocurrency. When Maxine Waters (D-Calif.), chairwoman of the House Committee on Financial Services, “brought that concept [of digital currency] up on such a prominent stage, it gave it new credence, which is going to propel this …Read More

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https://bankinnovation.net/allposts/biz-lines/payments/digital-dollars-gain-credence-despite-exclusion-from-stimulus-bill/

LSB’s McCrary: Speed, not access to funds, challenge banks during pandemic 

https://bankinnovation.net/allposts/biz-lines/lending/lsbs-mccrary-speed-not-access-to-funds-challenge-banks-during-pandemic/

Despite market strains caused by the novel coronavirus, providing funds for communities shouldn’t be a major issue for banks, according to Mike McCrary, first vice president of LSBX, Lincoln Savings Bank’s innovation lab.   “The access to funds should largely be there,” McCrary said during a Zoom event today for Bank Innovation subscribers. “The strength of …Read More

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https://bankinnovation.net/allposts/biz-lines/lending/lsbs-mccrary-speed-not-access-to-funds-challenge-banks-during-pandemic/

Can banks emerge stronger from the pandemic?

https://bankinnovation.net/allposts/biz-lines/retail/can-banks-emerge-stronger-from-the-pandemic/

The Coronavirus pandemic is posing significant challenges to the banking sector, forcing financial services providers into contingency mode and already driving cost-cutting initiatives and branch closures.

What damage will the coronavirus crisis create in banking? Margins will be squeezed, credit losses will increase and, for banks in an unfavorable position, it could take years to recover.

Despite the high uncertainty and distress today, and as difficult as this is to conceptualize given the current situation, banks have opportunities to emerge stronger and better able to address rapidly evolving customer needs.

In a recent survey conducted by INV Fintech of more than 100 industry participants, 92% of respondents agreed that the pandemic will drive increasing demand for digital channels, potentially altering customer acquisition and servicing models going forward. As a result, 78% of respondents expect financial institutions will increase spend in innovation and digital transformation in the next couple of years. In fact, the fintech age was similarly born out of the credit crisis.

There are still a number of unknowns about how the pandemic will impact financial services, but there appears to be broad consensus around increased adoption of digital across segments, as well as a need for banks to provide tools that allow customers to transact in simple, frictionless, and safer ways.

Below we describe six areas across servicing, payments and acquisition where fresh data from FI Navigator shows banks across the asset spectrum — especially smaller community and mid-size regionals — have opportunities to address. These relatively straightforward examples are only a few of many options banks should consider.

1. Servicing — Online Live Chat

Live chat functionality has now become table stakes as more customers expect their financial institutions to provide remote servicing channels. There are several options for banks to enable this functionality, including partnering with fintechs that have “out of the box” solutions that can be rapidly implemented. Nevertheless, data shows that fewer than 50% of banks below $50B in assets have rolled out this servicing channel, highlighting a significant opportunity and an unmet customer need.

 2. Servicing — Interactive Teller Machines

With social distancing and branch closures, ITMs could emerge as an important servicing channel to efficiently and safely serve segments that value human interaction. ITMs could benefit banks that are seeking to expand their footprint or reduce branch traffic while also making customers feel safe in conducting day-to-day transactions. Most banks, including larger regionals and national players, have not yet adopted ITMs as part of their network strategy. These banks should now start looking at ITMs as an option to optimize retail networks going forward.

 3. Payments — Contactless Cards

There is anecdotal evidence of supermarkets and businesses encouraging customers to use contactless cards to mitigate contagion. This very immediate need may shift customer behavior and increase adoption of contactless post crisis. However, as data shows, a majority of banks, both large and small, haven’t yet rolled out this product feature. They should consider doing so, given a potential uptick in demand.

 4. Payments —Digital Wallets

Like contactless cards, digital wallet adoption will increase both during and after the crisis. An analysis using Apple Pay shows that most banks above $10B in assets have already enabled this functionality. Those that haven’t done so should consider it, as digital wallets will become increasingly important.

 5. Acquisition — Online Account Opening

Despite mixed success rates, online account opening has rapidly become table stakes and an important driver of retail deposit growth, but even a few larger regional banks haven’t fully rolled out this acquisition channel. The opportunity is even greater for smaller community banks. With less branch traffic, offering a seamless online account-opening experience will become key for those who seek to emerge stronger from this crisis. Banks that do so will be poised for growth, others could fall further behind.

 6. Acquisition — Automated Account Switching

With increasing digital adoption, automated account switching could also become a major advantage for banks that have a more compelling offering to acquire and serve customers in simpler, faster, and safer ways. While this may sound opportunistic and somewhat irrelevant now, banks that are able to effectively switch dissatisfied customers over the medium term will be on a more stable footing post crisis. The opportunity for those that can move fast is there: data shows that fewer than 6% of banks across the asset spectrum currently have automated switching tools in place.

For most banks, digital transformation is not a short-term priority. Growth initiatives will likely take a back seat as more pressing issues are addressed. As we come out of this crisis, as hard as that is to consider these days, banks should think pragmatically and find opportunities to accelerate their digital transformation journeys. The six areas described in this article cover a few of many examples where banks could find ways to strengthen their value propositions.

At INV Fintech, we believe addressing gaps and identifying opportunities to innovate will allow banks and others in the fintech space to be in a stronger position once the pandemic is over. The current situation has caused distress at a level we had not seen in generations. We expect industry leaders will respond in creative ways to overcome these challenges.

Rodrigo Suarez is the principal of INV Fintech. To learn more about FI Navigator data used in this piece, click here. To learn more about INV Fintech, click here.

https://bankinnovation.net/allposts/biz-lines/retail/can-banks-emerge-stronger-from-the-pandemic/

SMB banking startups face new challenges as clients struggle 

https://bankinnovation.net/allposts/biz-lines/lending/smb-banking-startups-face-new-challenges-as-clients-struggle/

As the novel coronavirus forces social distancing and shelter-in-place mandates, many small businesses are being bled dry as they close their doors. Digital-only banking startups that serve small business clients, meanwhile, are figuring out what actions they can take to help their struggling customers.  “Many of our customers are seeing a huge, immediate drop in …Read More

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https://bankinnovation.net/allposts/biz-lines/lending/smb-banking-startups-face-new-challenges-as-clients-struggle/

US Bank eyes ‘autonomous banking’ future

https://bankinnovation.net/allposts/biz-lines/retail/us-bank-eyes-autonomous-banking-future/

U.S. Bank is taking steps to achieve autonomous banking, or “the nirvana” of banking, according to Doug Nielson, the bank’s senior vice president of innovation research and development.   “The nirvana, if you will, of banking would be truly autonomous banking, like the autonomous car,” Nielson said during a fireside chat today at Banking Transformation Week, an online conference focusing on banking, finance and …Read More

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https://bankinnovation.net/allposts/biz-lines/retail/us-bank-eyes-autonomous-banking-future/

Revolut makes US debut in shaky COVID-19 economy

https://bankinnovation.net/allposts/biz-lines/lending/revolut-makes-us-debut-in-shaky-covid-19-economy/

London-based Revolut today announced its U.S. launch after a beta test that began last summer. However, some in the industry question whether now is the best time to launch the U.S. product, given the novel coronavirus pandemic. “America, we come bearing good news in these uncertain times,” Chad West, Revolut’s head of marketing and communications …Read More

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https://bankinnovation.net/allposts/biz-lines/lending/revolut-makes-us-debut-in-shaky-covid-19-economy/

Brex: Market volatility not ‘doomsday’ for tech funding

https://bankinnovation.net/allposts/biz-lines/payments/brex-market-volatility-not-doomsday-for-tech-funding/

Brex, a corporate card and financial product startup that has raised $315 million in equity and reached a reported valuation of $2.6 billion since its 2017 founding, is optimistic about venture capital funding for tech companies, despite current market volatility.  “Within our sector, we definitely may have a slowdown, but it’s not doomsday, where nobody …Read More

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https://bankinnovation.net/allposts/biz-lines/payments/brex-market-volatility-not-doomsday-for-tech-funding/

As branches close, mobile video chat spikes 

https://bankinnovation.net/allposts/biz-lines/retail/as-branches-close-mobile-video-chat-spikes/

As customers practice social distancing and financial institutions close branches, banks and credit unions are increasingly helping consumers via video chats.  “We can do anything over video that a branch can do except handle cash and coin,” said Tracey Miller, senior vice president of operations at Pioneer Federal Credit Union. The Mountain Home, Idaho-based credit …Read More

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https://bankinnovation.net/allposts/biz-lines/retail/as-branches-close-mobile-video-chat-spikes/

Financial ecosystem fears long-term pandemic effects

https://bankinnovation.net/allposts/biz-lines/retail/financial-ecosystem-fears-long-term-pandemic-effects/

Financial institutions are rushing to reinforce digital channels and ramp up cybersecurity measures as people increasingly work and bank from home, and fears about the longstanding effects the coronavirus on the U.S. economy are top of mind for banking executives, according to fresh data from INV Fintech. The most common long-term concern among financiers accounting …Read More

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Fintechs seek US government funds to help make business loans

https://bankinnovation.net/allposts/operations/cap-fund/fintechs-seek-us-government-funds-to-help-make-business-loans/

Financial-technology firms including PayPal Holdings Inc. are lining up to help speed lending to small businesses during the coronavirus crisis — and are pushing for a slice of emergency U.S. government funding.

Industry group Financial Innovation Now urged Congress in a letter to provide capital to online lenders including PayPal and Square Inc., and to permit the firms to disperse Small Businesses Administration loans. The group’s members also include Inuit Inc. and Stripe Inc.

“Any federal small-business loan program must leverage digital advances in the marketplace to ensure that stimulus can reach those business most in need,” Financial Innovation Now said in its letter. “Millions of truly small businesses, those most likely to fail in the coming weeks, will not be well-served by loan guarantees made available exclusively through financial institutions.”

Last week, President Donald Trump said the SBA would provide low-interest loans in affected states and asked Congress to boost funding for the program by $50 billion. Small businesses are losing 80% to 100% of their revenue amid the pandemic, according to another fintech trade group, Innovative Lending Platform Association.

“If they all go out of business, we can’t serve them in the future,” Scott Stewart, chief executive officer of ILPA, said in an interview. “We don’t care about making any money on this, but we want to keep them alive so that when this is all wrapped up we can be lending to them in the long term.”

Many small businesses have only 10 days of cash on hand or less, according to Sam Taussig, head of global policy at Kabbage Inc., an online lender. While SBA loans can take as long as 90 days, fintech firms are touting their ability to process loans in days or weeks.

A Square spokeswoman declined to comment. PayPal didn’t immediately respond to a request for comment.

— Olivia Rockeman (Bloomberg)

https://bankinnovation.net/allposts/operations/cap-fund/fintechs-seek-us-government-funds-to-help-make-business-loans/

Digital-only financial institutions avoid leveraging pandemic fears 

https://bankinnovation.net/allposts/biz-lines/retail/digital-only-financial-institutions-avoid-leveraging-pandemic-fears/

The novel coronavirus may be closing bank branches nationwide, but some digital-only financial institutions are trying not to exploit consumer fears.  “Being a branchless bank is part of who we are, but we don’t want to resort to scare tactics,” said Nicole Lorch, chief operating officer at First Internet Bank. The Fishers, Ind.-based bank, which …Read More

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Contingency plans pay off for some FIs during pandemic 

https://bankinnovation.net/editorial/exclusive/contingency-plans-pay-off-for-some-fis-during-pandemic/

Before the novel coronavirus rocked the world, prompting widespread social distancing, the contingency plans some financial institutions had in place to facilitate remote work for their employees has made for a streamlining of the current workplace shift. Virginia-based Pentagon Federal Credit Union, for one, was already more than one year into forming its contingency plan to facilitate employees to work from home by the time COVID-19 hit the U.S. “I’ve been smiling this …Read More

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https://bankinnovation.net/editorial/exclusive/contingency-plans-pay-off-for-some-fis-during-pandemic/

Banks boost VPNs to accommodate remote work 

https://bankinnovation.net/allposts/biz-lines/retail/banks-boost-vpns-to-accommodate-remote-work/

With the novel coronavirus forcing employees to work from home, banking technology and security infrastructures are being put to the test.   “Today, if you are not a frontline employee, you are working from home,” said Jason Shields, vice president and loan operations manager at Gulf Coast Bank, which is based in New Orleans. The massive …Read More

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https://bankinnovation.net/allposts/biz-lines/retail/banks-boost-vpns-to-accommodate-remote-work/

Survey: Pandemic could spark lasting shift to digital channels

https://bankinnovation.net/editorial/exclusive/survey-pandemic-could-spark-lasting-shift-to-digital-channels/

The push for digital products from banks amid growing social distancing measures may persist long after the COVID-19 pandemic ends, according to early survey results from INV Fintech, Bank Innovation’s sister banking innovation services platform. Based on interim results of the survey released this week, 49% of respondents strongly agree that the coronavirus pandemic will …Read More

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https://bankinnovation.net/editorial/exclusive/survey-pandemic-could-spark-lasting-shift-to-digital-channels/

Join our ‘Fintech in the Age of Coronavirus’ Zoom meeting (Subscribers Only) 

https://bankinnovation.net/allposts/operations/comp-reg/join-our-fintech-in-the-age-of-coronavirus-zoom-meeting-subscribers-only/

Inside Terminal Three of the Capital International Airport in Beijing, China, on Wednesday, March 18, 2020. Photographer: Qilai Shen/Bloomberg

How will banking and fintech business models be impacted by this unprecedented coronavirus pandemic? What is the role of innovation in response to these rapidly unfolding events? How will banks and startups work together?  For insights into these questions, Bank Innovation and INV Fintech, its sister banking innovation services platform, will present a special Zoom meeting on …Read More

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https://bankinnovation.net/allposts/operations/comp-reg/join-our-fintech-in-the-age-of-coronavirus-zoom-meeting-subscribers-only/

Chase to temporarily close 20% of branches due to pandemic 

https://bankinnovation.net/allposts/biz-lines/retail/chase-to-temporarily-close-20-of-branches-due-to-pandemic/

JPMorgan Chase told its employees today it will be closing about 20% of its branches starting tomorrow. A Chase spokesperson told Bank Innovation the move would “help us protect our employees as we provide essential services to our customers and the communities we serve.”  The closures come at a time when banks are increasingly promoting …Read More

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https://bankinnovation.net/allposts/biz-lines/retail/chase-to-temporarily-close-20-of-branches-due-to-pandemic/