JP Morgan Chase is making its biggest acquisition since the financial crisis in acquiring InstaMed, the medical payments company, for more than $500 million; InstaMed automates medical billing by connecting hospitals, labs, and doctors offices with insurers and HMOs that make payments; they have 300 employees and processed $94 billion in transactions last year; it is interesting that JP Morgan’s only other significant acquisition in the last decade was WePay, another payments company that competes with PayPal and Stripe. Source.
In an interview with Karen Webster, the CEO of PYMNTS.com, the managing director of Wirecard North America, Deirdre Ives, discusses the growing demand for digital disbursements; the spread of mobile and online commerce and the growing real time payments infrastructure means that consumer expectations are increasing when it comes to the speed of receiving money; Ives said, “When you look at the trends out there, customers want speed, choice and ease — not only about who they pay, but how they are paid, too.” Source.
Banking as a service is taking root in some of the country’s largest brands; at a conference this week the Head of Payments and Risk at Uber talked about all the ways they are leveraging financial services to increase the loyalty of their drivers; from allowing drivers to overdraft their debit cards up to $100 to enabling them to access their money in near real time, up to five times a day; Uber and other large brands are bringing fintech and banking as a service to boost brand loyalty, drive more business or increase employee retention. Source.
SoFi CEO Anthony Noto was interviewed by Jim Cramer on CNBC’s Mad Money yesterday where he talked about the investing habits of millennials; many young investors like to invest in individual stocks that cost under $10 seeing them as less expensive; Noto said this is why SoFi launched free ETFs so young investors could get broad exposure to the market; but they are also interested in investing in names they know and understand so SoFi launched their new gig economy ETF; early investors in SoFi Invest don’t want to put a lot of money at risk. Source.
In an op-ed in American Banker the chief executive of the European Banking Federation, Wim Mijs, discusses the importance of cooperation between Europe and the US when it comes to financial regulation; he points to the G-20 meeting in Pittsburgh in 2009 during the height of the financial crisis that established the G-20 as the new permanent council for international economic cooperation; but the recent movement towards unilateralism may result in market fragmentation that will be bad for all parties; instead, “U.S. and EU regulators can better ensure a resilient and sustainable financial system by adhering to the long-standing principle of maintaining a level playing field and furthering cross-border cooperation”. Source.
Chris Skinner writes about the five phases in the development of the fintech industry; phase one was from 2005-2014 and it was about disruption where new fintech platforms focused on disrupting the banks; phase two from 2014-2017 was about discussion where banks and fintech platforms began to talk and the banks learned more about what these platforms can offer; we are now in phase three 2017-2022 which Skinner says is all about partnerships as there are dozens (possibly hundreds globally) of examples of bank-fintech partnerships; phase four from 2022-2027 will be about integration where open banking and open APIs become fully integrated into the banking system; finally, phase five he says will be about renewal where banking will be integrated with fintech and big tech. Source.
An in depth piece in The Financial Brand focuses on the new bank account offering from T-Mobile; called T-Mobile Money the new account, offered in partnership with BankMobile, offers consumers 4% interest on balances up to $3,000 and 1% of balances above that, although to get that highest rate you have to be a T-Mobile customer; these are mobile-based accounts that are open to everyone, not just T-Mobile customers; they also provide overdraft protection of up to $50 without any fee, as long as the balance is restored within 30 days. Source.
Frank Rotman, a founding partner at QED Investors, pens the popular Fintech Junkie blog and in his latest article he attacks relationship banking; he found that bankers don’t really grasp relationship banking because they are not treating their customers any differently to non-customers; he argues that when it comes to their customers most banks are “executing transactions for vs. building relationships with them”; this is why there is an opportunity for a new kind of bank, a “vertical bank” that can serve a a group of customers with similar wants and needs. Source.
The challenges continue to mount for UK challenger Metro Bank; founded by the former head of Commerce Bank in NJ, Vernon Hill, the bank is being investigated by British regulators for mistakes it made in risk-weighting commercial mortgages; shares of Metro Bank are down 80% over the past year and by more than 30% over just the past six week so there are calls for the ouster of Vernon Hill, the bank’s chairman; Metro Bank has also been hurt by its reliance on residential mortgages which make up about two-thirds of its loan portfolio. Source.