Zeta and Featurespace Partner to Combine Card Processing with Fraud Detection

  • Zeta and Featurespace are partnering to create a solution that combines credit card processing and fraud detection.
  • The new offering will be made available to U.S. credit card issuers.
  • The solution will be available out-of-the-box and will enable issuers to test and launch features in days, rather than weeks or months.

Modern core banking technology provider Zeta and fraud prevention company Featurespace are joining forces today. Under the partnership, the two are offering U.S. credit card issuers a solution that combines credit card processing and fraud detection.

Zeta was founded in 2015 to offer modern card processing for banks and embeddable banking for fintechs. The company’s Tachyon Credit offers banks modern credit card programs and spending tools to help boost engagement, increase scale, and decrease fraud. Additionally, Zeta enables fintechs to offer their own credit cards with spending controls and multi-factor authentication.

Zeta CEO and Co-founder Bhavin Turakhia described the company’s issuer clients as “demanding,” and said the company is enabling issuers to iterate on their credit card products faster to test and launch features in a matter of days. “With this solution available out-of-the-box to our clients,” said Turakhia, “their credit card holders will be protected against existing and future fraud attempts seamlessly while reducing the number of genuine transactions declined.”

U.K.-based Featurespace will offer its fraud detection engine that combines AI, behavioral networks, and rules-based decisioning to help organizations identify fraud without negatively impacting the customer experience. Featurespace’s flagship solution, the ARIC Risk Hub, secures more than 50 billion transactions per year across 500 million consumers located in 180 countries.

Combined, the two companies will unlock a range of capabilities for credit card issuers, including out-of-the-box availability, pre-built workflows, real-time transaction authorization, custom decision rules based on risk scores, real-time access to all transaction fraud events, and more.

Zeta was voted Best of Show at FinovateWest Digital 2020 and has more than 1700 employees and contractors located across the U.S., U.K., Middle East, and Asia. The company’s 35+ customers have issued more than 15 million cards on its platform. The California-based company has raised $280 million and last year was valued at around $1.5 million.

Featurespace has more than 70 clients, including HSBC, TSYS, Worldpay, RBS NatWest Group, Danske Bank, ClearBank, and more. Founded in 2005 by a university professor and his PhD student, Featurespace has raised $108 million, including its most recent investment of $37 million received in 2020.

“The partnership between Zeta and Featurespace brings together two of the most capable solutions across the industry in each’s segments,” said Carolyn Homberger, President of Americas at Featurespace. “We are very impressed with the way Zeta is rethinking the issuer processing stack from the ground up, utilizing modern and flexible architecture to provide outstanding new capabilities to Issuers. We’re extremely excited to bring our joint solution to market in the U.S.”

Photo by Joshua Woroniecki


Listen: The downfall of Silicon Valley Bank


The swift collapse of Silicon Valley Bank has shaken the banking industry during the past two weeks.  SVB engaged in risky lending practices and did not have the necessary safeguards in place, leading to a run on deposits that eventually sent the bank into receivership, Mike Sekits, co-founder and managing director of community bank partnership […]


Euro1 payment system migrates to ISO 20022 standard


Euro1, one of the largest payment systems in Europe, has migrated to the ISO 20022 messaging standard. For European banking, the transition is a step toward a standardized and efficient payment infrastructure.  Euro1 is a real-time gross settlement system operated by EBA Clearing, which processes high-value euro-denominated payments between banks and financial institutions. The system […]


Omnichannel Payments Provider Qolo Inks Partnership with PayQuicker

  • Qolo announced a partnership with payouts company PayQuicker.
  • The partnership will combine PayQuicker’s Payouts OS platform with Qolo’s card issuing and payments technology.
  • Headquartered in Fort Lauderdale, Florida, Qolo made its Finovate debut at FinovateFalll 2022.

Omnichannel payments and card issuing processor Qolo has teamed up with global payouts company PayQuicker. The partnership will combine PayQuicker’s Payouts OS platform with Qolo’s card issuing and payments technology. This will enable PayQuicker to issue a more advanced suite of card products, as well as make multi-channel payouts to help its corporate customers meet a wide range of payout needs.

“We chose Qolo as an issuing-processing partner because they offer the most modern, scalable, and flexible platform that will enable us to bring unique and differentiated payment solutions to our customers,” PayQuicker President Charles Rosenblatt said.

Headquartered in Fort Lauderdale, Florida, Qolo made its Finovate debut at FinovateFall 2022 in New York. At the conference, Qolo demoed its Companion Core, which offers banks low-cost, fintech functionality that runs in tandem with their existing system. Via a single API set, Qolo provides direct access to all payment rails and account types and offers program management, processing, and platform licensing, as well as acquiring, card and non-card payments, and account solutions.

“Qolo and PayQuicker are aligned in our vision to bring the best payments offerings to market,” Qolo CEO Patricia Montesi said. “We are thrilled to work with them and help power their innovative consumer and commercial programs.”

Founded in 2018, Qolo began the year with news that the company had processed more than $1 billion in total payouts in Q4 of 2022. Qolo has raised $19 million in funding, most recently securing $15 million in a Series A round led by The Raptor Group. The investment, in August 2021, came in the wake of a tripling of Qolo’s staff, as well as a pair of C-suite hires, and the launch of a beta version of its Qolo Accelerator program.

“We experienced strong investor interest fueled by our unique value proposition and rapid pace of customer acquisition,” Montesi said when the funding was announced. “The current fintech climate is driving massive growth, and Qolo’s 100% cloud-native omnichannel offering is perfectly positioned to meet the demand. And we have yet to see a payments model we can’t power.”

Photo by Kelly


Europe tech startups doubled debt financing in fundraising shift


European technology startups nearly doubled the amount of debt they took on last year, leaving them increasingly dependent on financing that may prove harder to come by in the aftermath of Silicon Valley Bank’s collapse. Private tech companies in Europe took out €30.5 billion ($32.7 billion) in debt last year, up from €15.9 billion in […]


What is Fintech Enablement?


Many financial institutions struggle to decide where they should focus their strategic modernization efforts. Should they prioritize back-office and core capabilities or more tactical front-end and point solutions? Trying to choose the best option often leads to significant resource use and major inefficiencies. Combined with the rapidly changing customer expectations driven by generational shifts in technology, this struggle means financial institutions need to quickly rethink their approaches to modernization and innovation if they hope to stay competitive.

That’s where fintech enablement comes in. Fintech enablement empowers financial institutions to access and leverage new technology and tools on their own to improve operating and decision-making processes, in turn offering streamlined products and services to their customers.

What is a Fintech Enablement Platform?

Designed to accelerate the launch, servicing, and expansion of financial solutions and new customer journeys, a fintech enablement platform is a technology infrastructure that acts as an operating system to implement fintech enablement’s many capabilities. They can often be thought of as one-stop-shops for all financial technology solutions, including digital wallets and payment gateways.

Fintech enablement platforms are also uniquely designed to integrate with existing systems in a cost-effective manner to achieve a seamless transition. They include prebuilt and modifiable components that can be quickly deployed in a more agile and responsive method than most traditional systems. Built to be highly scalable and customizable, fintech enablement platforms allow businesses to tailor solutions to their customers’ needs now and in the future.

5 Key Components of a Fintech Enablement Platform

There are several key components that can typically be found within fintech enablement platforms. If you are thinking of partnering with a fintech enablement platform provider, make sure they have these five components in place.

1. Product Definitions & Components in Critical Product Areas 

Having well-defined product definitions and components in critical product areas such as lending, savings, mortgages, insurance, payments, and embedded finance ensures the platform is clear and consistent for everyone involved.

2. Data Models That Sit on Top of Existing Data Sources

For data sources such as legacy core and open baking, having data models that sit on top of existing data sources enables the platform to integrate with a wide range of data sources, including legacy systems, cloud services, and third-party APIs.

3. Capabilities to Create Customer Journeys  

Effective fintech enablement platforms should have the ability to create customer journeys that make use of embedded automation and streamline both workflows and the customer experience, giving the platform a more personalized feel and gathering valuable insights about user behavior.

4. SaaS Ecosystem Connectors

SaaS ecosystem connectors that can be orchestrated into customer journeys and bring external innovation into the mix take advantage of the latest software innovations in a cost-effective manner.

5. Self-Use Tools

Self-use tools that allow nontechnical staff to create, service, and update solutions using low-code or no-code can reduce the turnround time and cut down on costs for simple changes or customizations.

Getting Started with Fintech Enablement

Whether you’re a large financial institution or new to the market, a fintech enablement platform may be the solution one-stop-shop you’ve been looking for. Learn more here.


Three Takeaways from FinovateEurope 2023


There is a challenge when it comes to writing about an event like FinovateEurope when you’re busy covering live demos, hosting on-stage fireside chats, and conducting off-stage video interviews. On the one hand, there’s a lot you’re going to hear and see. On the other hand, however, there’s a lot you’re going to miss, as well.

With that in mind, my apologies if I overlooked your favorite demo or keynote presentation in this “day-after” review of what I found most memorable at FinovateEurope. Better still, drop us a line and let us know just what kind of magic moment you had at our annual European fintech conference in London last week. We’d love to hear what you think!

Bringing the “E” the “S” and the “G” to the ESG Party

The maturation of the ESG (Environmental, Social, Governance) movement in fintech and financial services was on display as early as rehearsal day (the day before FinovateEurope officially opens when demoing companies practice their presentations on stage). It was impressive to see the number of companies that were offering solutions to make it easier for banks and FIs to leverage technology to better track their – and their customers’ – carbon footprint. Innovators like Connect Earth were among the most prominent. But companies like Storied Data, Topicus/Fyndoo, and OpenFinance also made it a point to show how their technologies gave institutions often granular insights into not just their environmental impact, but also into ways to minimize it.

From the main stage, ESG was also a theme that speakers returned to – often emphasizing the importance of connecting the “S” or “social” component of ESG with the “E” or “environmental” component. Sanghamitra Karra, who runs the Inclusive Ventures Lab at Morgan Stanley, reminded attendees during her Wednesday morning Fireside Chat that those who live in the most economically and socially underserved conditions in society are often those who are the most vulnerable to the challenges of climate change.

And in the wake of the Silicon Valley Bank (SVB) crisis, it is easy to see how “G” or “governance” has become an increasingly important issue for those who work for and rely on fintechs and financial services organizations. While some critics were busy trying to blame SVB’s woes on “wokeness”, or an inappropriately intense focus on diversity, equity, and inclusion, other more astute observers noted that Silicon Valley Bank, for example, did not have a Chief Risk Officer for much of 2022.

Crypto Still Out in the Cold

As the crypto winter slowly metastasizes into what FinovateEurope 2023 keynote speaker Steven Van Belleghem referred to as a “crypto ice age,” it was probably no surprise that the number of demoing companies boasting their cryptocurrency bonafides at FinovateEurope this year was low.

That doesn’t mean that there was zero discussion of cryptocurrencies at FinovateEurope this year. But what it does mean is that there has been a reckoning during which it looks as if digital assets like Bitcoin and ethereum will have to take a backseat while those innovating with the underlying blockchain technology search for better use cases.

Fortunately, there is a precedent for the path cryptocurrencies and blockchain technology may be forced to pursue over the next 5-10 years. In the same way that it took almost a decade for the promises of the dot.com era to be realized, so too may a few dark years for crypto be just what the industry needs in order to figure out how its technology can be best used in order to solve real world challenges. Beware of solutions in search of a problem, Van Belleghem warned from the FinovateEurope stage last week. And while he was talking about enabling technologies writ large – from embedded finance to the metaverse – those innovating in the cryptocurrency/blockchain space would do well to heed his advice.

CX as the Killer App

Whether the task was right-sizing the responsibilities that financial institutions have to ESG concerns, or understanding that building new products alone is not enough to help people solve problems, the solution offered was both consistent and clear: focus on the customer.

Want to improve your carbon footprint – or help your customers do so? Make it easier for customers to access the data and insights they need in order to make the changes they are often eager to make? Want to see more innovative technologies in the hands of more consumers? Make interfaces more intuitive, more seamless, and with greater interconnectivity and interoperability. Think more fintechs should be using your tools and platforms? Leverage low- and no-code building blocks to enable innovators with more modest technical resources to be as creative as larger, better resourced firms.

It has been a cliche in fintech and financial services that “every year is the year of the customer.” But at this moment of retrenchment – with fintech funding down, crypto crashing, and new enabling technologies still en route to proving their true utility – keeping the customer’s needs top of mind might be the best strategy for weathering the current storm and emerging unscathed when the clouds finally do part.

Fintech 2023: Don’t Call it a Comeback

From the crypto crash and subsequent crypto ice age to the Silicon Valley Bank crisis, there has been a headline sense that fintech may be entering a slowdown period. Very little of this was in evidence at FinovateEurope this year. Chris Skinner reminded us that great things often emerge from the rubble of dashed dreams. Hundreds of fintech and financial services professionals braved the turbulent winds at Heathrow airport (as well as a tube strike) to mix, mingle, and talk shop as our return to live events continues.

The desire to innovate in our industry remains strong. And with a focus on improving the lives of everyday customers – from individuals and families to businesses small and large – we are optimistic that fintech’s best, most productive days, are still to come.

Photo by Drew Powell


UBS Erases Losses as Investors Weigh Credit Suisse Deal Impact


UBS Group AG erased losses while investors digested the drawbacks and potential upside of its Credit Suisse Group AG takeover, a deal that forces it to wind down assets and restructure while handing over valuable assets at a bargain price. The government-brokered, 3 billion Swiss franc ($3.2 billion) deal signed late Sunday was intended to […]


Conversational AI streamlines CX for FIs


Conversational AI can assist banks with customer needs while providing savings for the banks that use the technology.  It allows financial institutions to better know and service customers via existing data, Erin Wynn, director of product management at technology company NCR Corp., told Bank Automation News.  “There are the things that [banks] could learn or […]


FinGoal Secures New Funding in Round Led by Naples Technology Ventures

  • Banking and insights platform FinGoal announced a new investment this week. The amount of the investment was not disclosed.
  • The funding round was led by existing investor Naples Technology Ventures (NTV).
  • FinGoal won Best of Show at FinovateSpring 2022 for its Aggregator Switch Kit, developed in partnership with fellow Finovate alum Envestnet | Yodlee.

Digital banking and personal finance insights platform FinGoal secured new funding this week. The Boulder, Colorado-based fintech announced that it has closed an investment round led by existing investor Naples Technology Ventures (NTV). The amount of the funding was not immediately disclosed.

“We believe FinGoal’s offering is a game changer in the banking and finance space,” NTV Managing Partner Mike Abbaei said. “Their platform will be a thriving success in the new digital world.”

This week’s funding marks the second time NTV has backed FinGoal. The company first invested in FinGoal in early 2022.

A specialist in enabling greater personalization in banking, FinGoal helps financial institutions understand where their customers are spending their money. These insights not only help FIs learn which banking products and services to offer their customers. This analysis also informs banks and other financial institutions on how best to market new offerings to their customers, as well.

“A business owner isn’t shopping for a business payments product – they want a way to better serve their customers and reduce costs,” FinGoal CEO David Nohe said. “Knowing what is really happening in the lives of customers allows FIs to do more with the account holders they already have.”

Making its Finovate debut in 2021, FinGoal returned to the Finovate stage less than a year later, securing a Best of Show award for its Aggregator Switch Kit that makes it easier for developers to quickly and easily transition away from their current data aggregator. The solution was developed in partnership with fellow Finovate alum Envestnet | Yodlee and provides a translation layer API that enables engineering teams to switch to Envestnet | Yodlee’s enrichment and make their first API call soon afterwards.

“Before today, switching aggregator was a pain in the butt,” FinGoal’s VP of Product Ariam Sium said from the FinovateSpring stage last May. “It took a lot of time and put a lot of product road maps at risk. At FinGoal, we believe that the best data made available through reliable and safe infrastructure is key to the future of financial services. That’s why we’re going to show you how to switch aggregators in minutes.”

Learn more about FinGoal in our podcast interview with Finovate VP Greg Palmer and FinGoal’s Sium.

Photo by Pixabay


Will former SVB UK clients turn to neobanks?


LONDON — HSBC acquired Silicon Valley Bank UK earlier this week, but will those tech clients stay with HSBC or will they turn to neobanks?  That was a question from Chris Skinner, chief executive of The Finanser, on Tuesday at the FinovateEurope event in London.  “HSBC got a very good deal in my opinion as […]


SVB crash opens door for treasury management innovation


The collapse of Silicon Valley Bank presents an innovation opportunity for fintechs in treasury management as more bank clients look to multibank strategies to ensure security in their capital. For example, as companies look to diversify their balance sheets for risk management purposes, they’ll need a snapshot of all of their accounts in one place. […]


Seven high-impact automation targets for financial institutions


It’s 2023, and technologies like machine learning, robotic process automation, natural language processing and artificial intelligence are fast becoming ubiquitous in both customer-facing and back-office digital infrastructure, bringing financial institutions a wealth of opportunities to leverage automation across the business.

Bucky Porter, financial services industry analyst, Windstream Enterprise

As these technologies and the automation capabilities embedded within them evolve and mature, it’s up to institutions and their IT decision-makers to identify areas of the business where these capabilities can deliver the most bang for the buck in terms of impact on customers, employees and the bottom line. Based on my work supporting financial services organizations in their digital transformation initiatives (with an emphasis on network connectivity, communications and security), here’s a look at seven of the most impactful ways institutions can tap into the power of digital automation in 2023 and beyond:

Enriching the customer journey

Automation across the communications channels that institutions and customers use to interact with one another is critical to providing the rich, disruption-free experiences that customers today expect. Using AI and ML technology along with advanced analytics tools, institutions can develop a full understanding of a customer’s (and a household’s) preferences, then tailor their journey with automated, hyper-personalized offers and recommendations, human-like automated chat/virtual agent interactions and the like. Many of these tools and capabilities can be found in the current generation of unified communications as a service (UCaaS) and contact center as a service (CCaaS) platforms.

The mortgage line of business is one area that’s especially ripe for automation, given the bottlenecks that continue to plague processing and the customer journey. Building more workload automation into the mortgage process, from application to booking, can minimize human interaction and human error, shrink approval times, simplify compliance with reporting requirements, move pipelines along faster, and ultimately translate into the kind of elevated customer experience that gives an institution a clear competitive edge.

Securing the network as well as the data, apps and users attached to it

First, the bad news: In 2022, according to fresh data from Contrast Security, 60% of financial institutions were victimized by destructive cyberattacks, 64% saw an increase in application attacks, 50% experienced attacks against their APIs, 48% experienced an increase in wire transfer fraud and 50% detected campaigns to steal non-public market information.

The good news is new multi-layered cybersecurity strategies like secure access service edge (SASE) and security service edge (SSE) use automation to thwart ransomware attacks and other types of attacks that pose a threat to banks. SASE and SSE can be deployed in tandem with a software-defined wide-area network (SD-WAN), and typically employ firewall as a service, secure web gateways , zero trust network access and cloud access security brokers, with a portal to manage and automate deployment of these elements. These comprehensive security frameworks can also be architected to have automated intelligent resiliency, ensuring service continuity without human intervention. The result is a unified framework to intercept, inspect, secure and optimize all traffic across a network that includes multiple branches.

Simplifying network management

Not only does SD-WAN provide institutions with access to advanced security strategies like SASE and SSE, but it also comes with automations that make the task of managing a network across multiple branches simpler and much less time consuming. It does so by automating tasks traditionally set manually. For example, an SD-WAN can automatically detect network conditions and provide dynamic path steering and forward error correction to ensure high-priority apps get the performance they need. Via a single network interface, many of the moving parts of the network can be centrally managed with automated capabilities, including prioritization of network traffic to optimize bandwidth, which increases reliability and app performance while maximizing network capacity at a lower cost. Benefits like these explain why a November 2022 study found that more than 95% of enterprises already have deployed an SD-WAN or plan to within the next 24 months, and why, anecdotally, I’ve seen so many financial institutions shift to SD-WAN recently.

Improving employee productivity

In the years I spent working as a bank executive, I can recall myself and other managers spending hours on duplicative manual data entry and document-shuffling — time that would have been much better spent on higher-value pursuits. Automating workloads and processes unburdens employees of monotonous, unnecessary busy work.

A financial institution also can impact employee productivity with how it manages the bandwidth across its communications network. With an SD-WAN, for example, an institution can use automation to enforce policies that allocate less bandwidth (or restrict access) to apps that can distract people from their work (personal social media, etc.).

Strengthening the employee experience

Automations also are proving their value on the HR side of the business, for example, where institutions are using portals through which employees, enabled by automation, can access self-service capabilities to manage their benefits, as well as to access training, upskilling and other resources.

Uncovering cross-selling and other opportunities

By automatically capturing and applying analytics to data from customer interactions and transactions, institutions can quickly identify opportunities to market highly targeted additional products and services to existing clients, while also developing personas that help them zero in on the right prospects. Then they can reach out and/or deliver highly personalized offers.

Sharing insight across open banking ecosystems

Open banking allows for customers to connect their various accounts and control the sharing of their financial data through APIs that interface with other financial institutions and fintech companies. Automations can ensure that data and insight is securely shared among the various partners within an open banking ecosystem, a must to provide a seamless experience for customers across the various apps they’re using within the ecosystem.

Bucky Porter is a financial services industry analyst at cloud-enabled connectivity and communications provider Windstream Enterprise.


Silvergate, Silicon Valley Bank, Signature and the “unbanking” of U.S. crypto


Over the course of a single week we witnessed, in quick succession, the collapse of three of the most crypto-friendly banks in the U.S. – Silvergate, Silicon Valley Bank (SVB) and Signature. The failure of SVB represented the largest bank failure since the 2008 financial crisis. While U.S. regulators swiftly stepped in to guarantee deposits and avert an immediate banking crisis, the collapse of these three institutions has accelerated what is being called the “unbanking of crypto” in the U.S. While digital asset industry skeptics may view the past week as the final nail in the coffin for crypto, crypto lives on, with Bitcoin rallying to a 9-month high. As we take stock of this latest crisis, we unpack some of the implications for the U.S. digital economy.

The events 

Silvergate, Signature and SVB were considered to be crypto-friendly, although each had its own diverse depositor base that went far beyond the digital assets industry. In addition to banking many in the crypto ecosystem, Silvergate and Signature also provided important infrastructure supporting the digital asset industry in the form of the 24/7 SEN and Signet payment networks, and counted as clients major crypto firms, like Binance.US, Kraken, and Gemini. SVB was the primary bank for many venture capital, tech and digital assets firms, including Circle, Roku, BlockFi and Roblox.

The fates of these banks unravelled quickly: on Wednesday, March 8, Silvergate Capital announced that it would be winding down operations and liquidating its bank, after reporting that it would not be filing its annual report. On Friday, March 9, Silicon Valley Bank collapsed after depositors withdrew more than $42 billion following SVB’s statement on Wednesday that it needed to raise $2.25 billion to shore up its balance sheet. On Sunday, March 12, Signature Bank, which also had a strong crypto focus but was much larger than Silvergate, was seized unexpectedly by banking regulators. Crypto industry veteran Meltem Demirors (@Melt_Dem) tweeted “and just like that, crypto in america has been unbanked Silvergate. Silicon Valley Bank. Signature. in one week”. On Friday, March 17, SVB’s parent filed for a court-supervised reorganization under Chapter 11 bankruptcy protection to seek buyers for its assets.

The response

The rapid collapse of SVB – the second largest bank failure in U.S. history – was a major shock to the venture capital and start-up community. VCs, founders and other depositors faced extreme uncertainty about the fates of their bank accounts and business operations, including concerns about making payroll and having to furlough employees. Many expressed grave concerns about the likelihood of additional “digital bank runs” on Monday morning, while others cautioned about moral hazard – including the view that, if the government came to the rescue, it would be incentivizing and rewarding risk taking behaviors – thereby “privatizing wins and socializing losses.”

In the end, depositors won. Amid assurances that there would not be a “bailout” of the banks, the U.S. federal government swiftly stepped in to guarantee all deposits for both SVB and Signature depositors, adding confidence and sparking a small rally in the crypto markets. By helping the banks perform on their contracts and making depositors whole, a Lehman-type situation was averted and market confidence was at least somewhat restored. 

No taxpayer funders were used – instead, the Federal Deposit Insurance Corporation (FDIC) declared that it would create a “bridge bank” to protect SVB customers and another for Signature (typically FDIC insures all deposits up to $250,000 for individual bank customers and does not extend its protection to customers of crypto exchanges). Nevertheless, it is possible that bank depositors may bear additional expenses, such as increased fees, as a result of the backstop facilities.

Fractional reserve banking

Importantly, these events have focused the public’s attention on the risks of fractional reserve banking – a system in which only a fraction of bank deposits are required to be available for withdrawal – risks that, ironically, blockchain technology was designed to avoid. 

In a world in which bank customers no longer need to stand in lines at local branches to withdraw their funds and, instead, can move their funds in seconds using their phones – and where public sentiment can reach frenzied levels based on a Tweet – bank runs may occur more quickly and frequently than ever before. As bank customers realize, perhaps for the first time, that, if they are receiving yields on their deposited funds, those funds might not actually be sitting “at the bank,” available for withdrawal, many have begun to ask whether they could choose to pay a fee to a bank for the certainty that their respective deposits would be available. 

Political drivers

An intense blame game has been unfolding in the media, with some arguing – not for the first time – that crypto needs to “stay out of” big banks. Questions also remain about the extent to which bank regulators were motivated by that very goal. For example, in the search for a buyer to purchase SVB, it was rumored that at least one GSIB (globally systemically important bank) had been prevented from bidding. 

Former Congressman, Barney Frank, an architect of the Dodd-Frank Act (and a member of Signature’s board of directors), has suggested publicly that New York regulators targeted Signature to convey an “anti-crypto message.” Yet according to Reuters, the New York Division of Financial Services (NY DFS) said that its decision was based on “a significant crisis of confidence in the bank’s leadership,” with a spokesperson asserting, “[t]he decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers” and emphasizing, “[NY] DFS has been facilitating well-regulated crypto activities for several years and is a national model for regulating the space.

Reuters also described reports that the FDIC had included a crypto-specific condition on bidders for Signature, requiring that “….any buyer of Signature Bank must agree to give up all the crypto business at the bank….” While the FDIC has denied this, it would not be the first time that a U.S federal regulator required a would-be buyer to discontinue digital asset-related activities as a condition to purchasing a bank (for example, when SoFi Technologies, which engaged in some digital asset-related activities, acquired a national bank).

Regulatory drivers

There certainly appear to be a number of regulatory drivers restricting the extent to which banks can participate in crypto markets. As demonstrated in the SoFi acquisition, the OCC confirmed that national banks and federal savings associations “must demonstrate that they have adequate controls in place before they can engage in certain cryptocurrency, distributed ledger, and stablecoin activities,” noting further that a bank “….should not engage in the activity until it receives a non-objection from its supervisory office.” 

In addition, a new Fed rule, which “presumptively prohibits” member banks from holding certain crypto assets, calls into question whether banks will be able to serve as “qualified custodians” for purposes of the SEC’s “custody rule,” under the Investment Adviser Act of 1940, as amended. This new Fed rule has been announced relatively contemporaneously with the SEC’s proposed expansion of the “custody rule” into a “safekeeping rule” – requiring the use of a qualified custodian for all customer assets (including, explicitly, digital assets), rather than only for customer assets that constitute “customer securities” or “customer funds.” 

While banks otherwise might be considered the natural players to serve as “qualified custodians,” constraints exist on their ability to engage in digital asset-related activities. Some have expressed concerns that adoption of the proposed “safekeeping rule,” without clear guidance about which entities constitute “qualified custodians,” may, effectively, result in a ban on crypto VC investments.

Impact on policy

Federal bank interest rate hikes last year may well have a been a factor in last week’s events. Increased interest rates caused the value of fixed-income bonds, like those in which SVB was reported to have invested, to dip, while arguably increasing depositors’ needs to access their funds. This created a negative feedback loop, with banks forced to sell their long-term bond holdings into a down market to meet customer withdrawal demands. 

Some also believe that Jerome Powell’s statements, suggesting an additional 50 basis point rate hike, contributed to the public’s crisis of confidence in SVB and Signature. Now, it appears that a 50 basis point increase is off of the table, with some predicting a 25 basis point increase, or no increase at all.

The bank failures also have spurred suggestions to increase the FDIC guarantee limit above $250,000 – the FDIC limit previously has been raised 7 times – and implement for regional banks new reserve and stress-testing requirements

Impact on stablecoins

Circle (issuer of the USDC stablecoin) also was affected by SVB’s collapse. When Circle disclosed its exposure to SVB, USDC, the world’s second “largest” stablecoin, temporarily lost its peg to the U.S. dollar, sinking to an all-time low of 88 cents. Circle’s disclosure appeared to be clear and timely, explaining where Circle held its funds and its go-forward plan and identifying potential challenges. Although the market’s response to such transparency appeared to be negative, the depegging ultimately was resolved. Unlike last year’s Terra/Luna unravelling, which involved an unbacked algorithmic stablecoin, the U.S. dollar reserve backing USDC always existed in the account, and the “loss” was never realized.

Many regard USDC (backed by real assets like U.S. Treasuries and cash) as a stablecoin with good transparency; its issuer, Circle, is regulated by NY DFS. While Circle held USDC reserves in bank accounts and appears to have provided the public with the types of meaningful disclosure that regulators seek, some wonder whether such frankness, in a real-time, social media-driven world, may have increased the market’s skittishness.

Interestingly, despite all of the market turmoil, Tether’s stablecoin, USDT, never lost its $1 peg. Certain U.S. regulators have criticized USDT (which, as of March 9, reportedly exceeded 54% of the market share among stablecoins), expressing concerns about a relative lack of transparency concerning USDT’s reserves (much of which appears to be held in the form of less-liquid commercial paper) and the potential for systemic risk. It may be a fluke that holding stablecoin reserves in a more opaque way resulted in a more stable situation/price. Yet, some suggest that SVB’s very transparency to the market about SVB’s situation may have contributed to the bank run. 

Circle’s experience also may affect future U.S. federal regulation. In the wake of collapses of previously high-flying digital asset-related players like FTX, Celsius, Genesis, BlockFi, Three Arrows Capital and Voyager, some believe that the digital asset-related federal legislation most likely to be passed first would focus on stablecoins, instituting requirements relating to reserves (perhaps requiring fiat-backing), disclosures and reporting, similar to NY DFS’s existing rules. USDC’s depegging may affect the terms of any such federal legislation, including whether such stablecoin reserves should be held in smaller amounts spread across multiple banks – or whether they should be held in banks at all. Interestingly, some accused banks of introducing risks to crypto.

Impact on crypto liquidity

In addition to drawing regulatory attention, Silvergate’s, SVB’s and Signature’s failures have increased market focus on stablecoins and what backs them, the potential knock-on effects for structures that rely on stablecoins (notably, DeFi and collateral arrangements) and the availability of stablecoins themselves. 

Indeed, the disappearance of both the SEN and Signet real-time payment platforms is significant, because they provided the fiat-to-crypto “on ramps” and “off ramps” – 24 hours a day, seven days a week – via their respective instant settlement services. Although Circle reported having previously discontinued use of SEN, it relied on Signet for purposes of USDC minting and redemptions. 

While Circle swifty found replacement banking partners, in the forms of BNY Mellon – an established “safe” name – for settlements, and Cross River Bank for USDC minting and redemptions, Circle disclosed that, for the time being, USDC minting and redeeming only could be effected during “business hours” – nearly a foreign concept for a digital assets industry accustomed to 24/7 trading. It remains to be seen what the move from a 24-hour market to a business hours market will mean for crypto liquidity. Some have suggested that so-called challenger banks may step-in to try to bridge the gap in 24/7 services. 

Crypto lives on

With the unforeseen failure of three key banks, and reported moves to separate digital assets from Globally Systemically Important Banks – and, perhaps, banks in general – where do we go from here? Many wonder whether the crypto industry will be pushed further and further offshore. It is, however, important to remember that crypto was not to blame for this crisis – arguably, fractional reserve banking was. SVB was not a crypto bank, and although Silvergate and Signature provided crypto payment settlement systems, both were smaller than SVB and also had many non-digital asset-related depositors. 

Indeed, Bitcoin was created in response to the last financial crisis, with a goal to avoid situations and risks posed by fractional reserve lending. Perhaps in response to uncertainties in the traditional financial sector, Bitcoin this week reached a 9-month high. Despite some calling the current banking crisis a death knell for crypto, others predict that it is Bitcoin’s moment to shine. In any event, one thing is clear: crypto lives on.

Hear more on this topic and the Digital Economy from our key Fintech voices in the U.S.: The Unbanking of Crypto // Fintech | The Linklaters Podcast (podbean.com)


Envestnet to unveil product to help banks avoid an SVB scenario


Envestnet is rushing to release a product Monday that is designed to help financial institutions avoid a “Silicon Valley Bank situation.”  The wealth tech giant’s new Bank Deposit Index will allow bank treasury executives to track inflows or outflows of deposits and segment them by “big, regional or small banks,” as well as consumer segments […]


India’s PhonePe Receives $200 Investment from Walmart

  • PhonePe raised $200 million from Walmart.
  • With this latest tranche, the India-based company maintains its $12 billion valuation.
  • The new investment brings PhonePe’s total funding to $650 million.

Just one month after raising $100 million, India-based PhonePe announced it closed a $200 million investment. With the new round, PhonePe’s pre-money valuation remains flat at $12 billion.

Today’s investment boosts the payments application expert’s total funding to $650 million, placing it more than halfway to reaching its $1 billion capital raise target. In its announcement today, PhonePe noted that it is expecting further progress toward the $1 billion goal, saying it is expecting more funding “in due course.”

PhonePe will use today’s funds to build and scale new businesses including insurance, wealth management, lending, stockbroking, Open Network for Digital Commerce-based shopping, and account aggregators. The investment will also help PhonePe grow UPI payments in India, including UPI lite and Credit on UPI. “We are excited about the next phase of our growth as we build new offerings for Indian consumers and merchants, along with enabling financial inclusion across the nation,” said PhonePe Founder and CEO Sameer Nigam.

“We are excited about PhonePe’s future and have confidence in how it continues to expand its offerings and provide access to financial services for Indians at scale,” said Walmart International President and CEO Judith McKenna. “India is one of the world’s most digital, dynamic and fastest growing economies, and we are pleased to have the opportunity to continue to support PhonePe.”

PhonePe was founded in 2015 and was acquired by Walmart-owned Flipkart in 2016. The company counts around 450 million registered users, a total that accounts for nearly one in three adult Indians. In 2017, PhonePe began offering investing tools, mutual fund products, and insurance tools.


Morgan Stanley invests in early-stage companies, diversity


LONDON — Morgan Stanley is changing the way it looks at inclusivity and diversity in financial services through its Inclusive Ventures Lab.  “We have been working on thinking about the equity in this space,” said Sanghamitra Karra, EMEA head of multicultural client strategy and multicultural innovation lab at venture capital group Morgan Stanley, Wednesday at […]


Discover democratizes tech with open-source developer platform


Discover Financial Services is democratizing its technology by allowing engineers and outside developers to share their knowledge in a newly launched platform.  The platform, Discover Technology Experience, allows developers to share ideas and work on technologies such as robotic process automation (RPA). Its aim is to attract engineers to work for Discover, Angel Diaz, leader […]


Stripe Lands $6.5 Billion in Funding at $50 Billion Valuation

  • Stripe received $6.5 billion in Series I funding, along with an updated valuation of $50 billion.
  • The $50 billion valuation is almost half of the company’s peak valuation of $95 billion received in 2021.
  • Today’s investment will not be used to fuel company growth, but will instead be used to provide liquidity to employees and address employee equity awards withholding tax obligations.

Stripe announced a $6.5 billion Series I funding round today. Alongside the financing round, the payments processing company also unveiled an updated valuation.

The investment comes from existing Stripe shareholders– including Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital. New investors GIC, Goldman Sachs Asset and Wealth Management, and Temasek also contributed to the round, which boosts Stripe’s total funding to $8.7 billion.

Stripe also unveiled that it is now valued at $50 billion. This number is notably lower than the company’s peak. Stripe’s valuation rose to $95 billion in March of 2021, making it the most valuable U.S. startup. In July of 2022, the company’s valuation began tipping downward to $74 billion, and earlier this year, TechCrunch reported that Stripe was valued at $63 billion.

Unlike most venture funding rounds, however, today’s investment will not be used to fuel company growth. Instead, as Stripe notes in its announcement, “The funds raised will be used to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards.” This liquidity will offset the issuance of today’s round’s new shares, and therefore will not result in a reduction of the percentage of ownership that current investors hold in the company.

Founded in 2010, Stripe processes hundreds of billions of dollars each year and offers a range of products– including a suite of global payments solutions, banking-as-a-service offerings, and revenue and financial management tools.

Photo by Jonathan Borba


3 keys to successful fintech-bank collaboration, CX


LONDON – Banks continue to grapple with idea of buy vs. build, but partnerships with fintechs allow the entities teach each other about innovation and customer experience.  “Banks can learn from fintechs how to be agile, innovative and customer-focused, while we offer them a big installed base and learnings on how banking [and regulation] works,” […]