David Durand, Advisor, Innovation and Advocacy
September 9th, 2020
David Durand, LL.L., B.Sc. chem., – Founder and Managing Partner of Durand Lawyers – Lawyer (Québec)[...]
Category Archives: Digital, NEO and Open Banking
We’re the first neo-bank to break-even, says Starling Bank
AltFi | Daniel Lanyon | Nov 20, 2020
A boom in business banking has helped boost Starling Bank’s coffers.
Strong momentum in new customer accounts and increasing revenues have prompted digital bank Starling to break even, according to a trading update for the three months to 31 October.
Starling Bank, which was launched by Anne Boden five years ago, is the first ‘neo-bank’ to reach this milestone, the company said.
In October Starling hit 1.42 million retail accounts compared to 827k, an increase of 71.7 per cent. Over the same period business accounts were the standout growth area with an increase of 245 per cent, from 74,000 to 256,000. Business accounts saw a 500 per cent increase in total deposits with the average amount held by SMEs also going up.
Starling now has total customer deposits of c.£4bn.
This has all helped Starling generate a positive operating profit of £0.8m for the month of October 2020, which represents £10.1m on an annualised basis.
See:
Neobanks Can’t Fight the COVID-19 “Flight to Quality”
Investment Crowdfunding Advocates Join to Launch New Fintech Startup GUARDD in Move to Boost Secondary Markets for Exempt Securities
In total Starling generated total operating income of £9m for the month of October 2020. This, it adds, translates to an annualised revenue run rate of c.£108m. This figure is split £5.5m of net interest income and £3.5m of gross fees and commissions income.
The figure represents a 400 per cent increase in revenue compared to 12 months ago and a c.30 per cent increase from Starling’s last trading update three months ago.
“Interest income continues to be supported by strong growth in lending volumes, particularly the extension of government-backed lending schemes,” Starling said.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!   |
Google Pay’s massive relaunch makes it an all-encompassing money app
The Verge | | Nov 18, 2020
It (Google Pay) will include tap-to-pay, peer-to-peer, personal finance aggregation, customizable deals, and even full banking services
Today, Google Pay for both Android and iOS is relaunching with a giant array of new features. It turns the app from something that most people think of as a tap-to-pay card repository or peer-to-peer payment system into a much more ambitious service. The new app begins rolling out across the United States today.
The new version of the app will have three new tabs:
“Pay,” which includes peer-to-peer payments as well as your transaction history using tap-to-pay; “Explore,” which will be a place where Google will offer deals and discounts; and finally, “Insights,” which will allow you to connect your bank accounts to get a searchable overview of your finances.
You will even be given the option to allow Google Pay to crawl your Gmail inbox and your Google Photos account to look for receipts. Google will use OCR technology to auto-scan them and integrate them into your finance tracking.
In 2021, Google will partner with some banks to directly offer fully online checking and savings accounts inside Google Pay — a service Google is calling “Plex.”
Not all of these services are strictly new for Google, but this will mark the first time they’re unified into a single app. In doing so, Google Pay is now arguably a direct competitor to a wide array of other apps and services, including Apple Pay, Samsung Pay, PayPal, Venmo, Square Cash, Intuit’s Mint, Simplifi, Truebill, Shop, and also online banks like Ally. That is a lot of companies that will have to contend with Google making a high-profile push into their market.
See: Google and Gates Foundation to help spread digital payments in developing countries
All of the advanced features are opt in, so if you prefer to simply use it as it currently exists today (as a tap-to-pay app on Android or peer-to-peer payments on the iPhone), you should be able to do that. Even so, this is a huge expansion of capabilities and data collection in a Google app that is likely to raise privacy concerns.
Google tells me that it has a policy to not sell or share data to third parties and that it will not “share your transaction history with the rest of Google for targeting ads.” It will also have a first-use experience that will present a series of privacy prompts and settings options. Unlike Apple Pay, Google’s servers will have access to your data so it can be analyzed and made searchable for you in the app — though the company assures that it’ll be strongly encrypted.
A stranger — and perhaps telling — privacy option is that those who want to get personalized deals will have the option to agree to a three-month “trial” of allowing Google to analyze their transaction history to customize their offers. After the three months, they’ll be prompted if they want to keep using that part of the service.
Let’s dig into what we know about each aspect of the service.
Insights
The rightmost tab in Google Pay is the place where the app will provide a lightweight version of apps like Mint and Simplifi that presents much of your financial information in one place. Google’s take on it is called “Insights,” and as you might expect, it heavily integrates both search and Google’s ability to process data with its algorithms.
See: Fintech Fridays EP46: Making Business Borderless: International Payments and Partnerships
After you connect your banking and credit accounts, Insights will begin to show you reports of your spending and saving as well as upcoming bills. It does this by scanning through your transactions rather than needing you to manually enter or categorize things. It works with standard checking, savings, debit, and credit cards.
Plex
In 2021, Google will launch a new banking service called Plex. It will let you handle basic checking and savings in the app, engaging directly with an online bank. This isn’t Google directly offering banking services, to be clear. Instead, Google will essentially let some banks use Google Pay as their banking app.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
Bill to overhaul Canada’s privacy laws coming soon
CBC | | Nov 16, 2020
Minister Bains' mandate letter hints at 'enhanced powers for the privacy commissioner'
As the number of high-profile online consumer security breaches continues to grow, the federal government is expected to introduce a bill soon to shake up Canada's privacy laws — possibly as early as this week.
Innovation Minister Navdeep Bains signalled plans to introduce the legislation late last week on the House of Commons notice paper.
The bill — officially called "An Act to enact the Consumer Privacy Protection Act and the Personal Information and Data Protection Tribunal Act and to make consequential and related amendments to other Acts" — would be the first major attempt to change Canada's privacy law in decades.
See: Cadillac Fairview broke privacy laws by using facial recognition technology at malls, investigators conclude
Details of the bill won't be available until the legislation is tabled, but a spokesperson for Bains pointed to the promises outlined in the minister's mandate letter.
That letter — essentially the minister's marching orders from Prime Minister Justin Trudeau — tasked him with drafting a "digital charter" that would include legislation to give Canadians "appropriate compensation" when their personal data is breached.
It also promised to introduce new regulations for large digital companies to better protect Canadians' personal data and encourage more competition in the digital marketplace, and to appoint a new data commissioner to oversee those regulations.
"It will be significant and meaningful to make it very clear that privacy is important. Compensation, of course, is one aspect of it," Bains said back in January, adding that the government also wants "to demonstrate to businesses very clearly that there are going to be significant penalties for non-compliance with the law. That's really my primary goal."
The letter also calls for "enhanced powers for the Privacy Commissioner." The office of Privacy Commissioner Daniel Therrien — who has been calling for more powers — said he will be briefed on the bill after it's tabled.
See: Capital One data breach shows why it shouldn’t be a tech company that does banking
"Our office has long been calling for federal privacy laws better suited to protecting Canadians in the digital age," said Therrien's spokesperson Vito Pilieci.
"We need a legal framework that allows for responsible innovation that serves the public interest and is likely to foster trust, but prohibits the use of technology in ways that are incompatible with our rights and values. The law should also provide for enforcement mechanisms that ensure individuals have access to quick and effective remedies for the protection of their privacy rights, and create incentives for broad compliance by organizations."
The 'right to be forgotten'
Earlier this month, a joint investigation by the federal, Alberta and B.C. privacy commissioners concluded that the real estate company behind some of Canada's most popular shopping centres embedded cameras inside its digital information kiosks at 12 shopping malls in major Canadian cities to collect millions of images — and used facial recognition technology without customers' knowledge or consent.
B.C. Information and Privacy Commissioner Michael McEvoy said the commissioners likely would have pursued fines against the company, Cadallic Fairview, if they'd had the power.
"Fines in a case like this would have been a consideration. It is an incredible shortcoming of Canadian law," he said.
"We as privacy regulators don't have any authority to levy fines on companies that violate peoples' personal information and that should really change."
See: FFCON Week 5 Wrap-up: Digital Identity & Convergence Marketplaces
Statistics Canada says that about 57 per cent of Canadians online reported experiencing a cyber security incident in 2018.
Bains's mandate letter also hints at the introduction of a so-called "right to be forgotten" or "right to erasure" law by calling for the "ability to withdraw, remove and erase basic personal data from a platform."
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Trudeau government set to introduce privacy bill aimed at protecting Canadians
The Trudeau government is poised to introduce legislation aimed at better safeguarding the privacy of Canadians in the digital era.
The bill, to be tabled as early as this week, would be a step toward realizing commitments set out in the mandate letter of Innovation Minister Navdeep Bains.
It would also flesh out the 10 principles — from control over data to meaningful penalties for misuse of information — that make up the federal digital charter.
See:
Digital IDs Help Open Banking Reach Its Fullest Potential
Smart Cities Offer Promises and Concerns Over Privacy
Prime Minister Justin Trudeau has asked Bains to work with other ministers to advance the digital charter and beef up the privacy commissioner’s powers with the overall goal of establishing a new set of online rights.
They are to include:
- the ability to withdraw, remove and erase basic personal data from a platform, such as Facebook or Twitter;
- knowledge of how personal data is being used, including through a national advertising registry;
- the ability to review and challenge the amount of personal data that a company or government has collected;
- a means of informing people when personal data is breached, with appropriate compensation;
- and the ability to be free from online discrimination including bias and harassment.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
How is open banking progressing in the UK?
Raconteur | Jonathan Weinberg | Nov 8, 2020
It has been nearly three years since the Second Payment Services Directive (PSD2) came into force. A much-heralded move, has this piece of European legislation enabled the UK’s traditional financial services sector to digitally transform or is it yet to fully embrace the potential of Open Banking?
The UK’s Competition and Markets Authority (CMA) had hoped PSD2, which arrived in January 2018, would level the playing field between incumbent legacy banks and smaller fintech challengers.
Enabling newcomers to get a foothold for growth in the market was an issue highlighted in 2016 by the CMA which went on to set up the Open Banking Implementation Entity (OBIE) to “create software standards and industry guidelines that drive competition and innovation”.
See: UK government open banking tender puts focus on payments
However, experts are divided on whether this has been achieved. Many highlight slow movement by some of the incumbents, despite the new arrangements for secure sharing of current account information with third-party providers, offering transformative tools for personal customers and smaller businesses.
Using new apps and websites, customers can see a single clear view of their finances to deliver more effective budgeting, gain easy access to the best deals, services and credit options from the whole market and spot fraud faster.
Official figures out in September do appear to be promising. Users of Open Banking-enabled products exceeded two million, a doubling in just over six months. Imran Gulamhuseinwala, trustee of OBIE, which is funded by the UK’s nine largest banks and building societies, says Open Banking is “rebalancing the market in favour of consumers and small businesses”.
Banks have not embraced Open Banking fast enough
But others are less sure. Luc Gueriane, chief commercial officer at payment solutions company Moorwand, believes Open Banking is failing. ”Beyond the reluctance from banks, low-consumer awareness and the limited number of services are also key to its failing,” he says.
“The products that are there are often overshadowed by the reliability and security which is associated with incumbent players.
See: Finance Canada Announces Second Phase of Open Banking Virtual Consultations Dates
“It must become both easier and cheaper for new players to build Open Banking APIs [application programming interfaces] and propel their services into the mainstream. Making infrastructure readily available will be key.”
Adam Bialy, chief product officer at OpenPayd, adds: “The APIs are being built and the infrastructure is in place, but few banks are meeting PSD2 requirements. Open Banking has been less of a catalyst and more of a ‘gentle nudge’, with consumer-facing applications being limited to chiefly account aggregation services.”
And while Mike Hampson, chief executive of Bishopsgate Financial, feels the slowness was due to the difficulty of “adapting API legacy architecture to be flexible and responsive, rather than a deliberate attempt to stifle the competition”, he says: “But now, banks can use the competitive data held by other providers, to expand and rebundle their services, while improving their bottom line.”
One suggestion for such innovation is to take more advantage of account-based payments within the retail sector, as this would cut the cost of commerce, but Bialy explains this is being hindered by “clunky user authentication flows that are different for each bank”.
See: 3 examples of what open finance can do right now
This is still the right leap forward, according to Jonathan Hughes, chief executive of payment and banking experts Pollinate Horizons.
”For merchants, there are significant economic advantages to accepting payment through an Open Banking transaction, rather than on the card rails,” he says. “The large enterprises that adopted Open Banking early on have forecast huge savings when compared to using cards, which in turn could result in savings for small and medium-sized enterprises.”
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
Why banks don’t die
The Finanser | Chris Skinner | Nov 11, 2020
Have you noticed how people talk about disruption more and more, and note the collapse of companies like Blockbuster, Kodak, Nokia and Thomas Cook? In fact, there are more companies entering and leaving the stock market lists than ever before, with the average tenancy now under two decades compared to six decades or more in mid-1950s.
A 2015 McKinsey study found that the average corporate life span has been falling for more than half a century by analysing Standard & Poor’s data, which shows a company’s survival was 61 years in 1958, 25 years in 1980, and just 18 years in 2011.
Change is faster, the challenges bigger, the need to adapt greater and the environment far harder than ever before.
So sad, but companies are not built to last forever. They come and go with the flavours, tastes and the needs of society.
But this is not true for banks.
Banks last forever.
See:
JP Morgan Veteran Daniel Masters Explains How Blockchain Will End Commercial Banks
Finance Canada Announces Second Phase of Open Banking Virtual Consultations Dates
This is well illustrated by a comment from challenger bank Varo, who are seeking a national bank charter in America.
Varo is betting that looking more like a traditional bank will pay off in the long term. “It’s really the only long-term sustainable route if you want to be around 50 to 100 years from now,” said Colin Walsh, chief executive of Varo.
Banks don’t die. They may be zombies, failed, broken, wrong, stupid, dumb or whatever other words you want to use, but you can’t kill them.
The main reason this is the case is because they are protected by governments. Left or right governments want strong and stable banks to ensure a strong and stable economy. Therefore, they protect these treasured assets like no other companies. For this reason, banks live forever.
They can be acquired …
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
Banking on the “Business of Banking”: How the 2nd Circuit’s Ruling in Lacewell v. OCC Could Change the Future of Fintech Regulation
Kilpatrick Townsend | Mike Breslin and Bennett Gillogly | Nov 11, 2020
Despite often operating on a nationwide scale, fintech companies rarely meet the stringent requirements for obtaining a national banking charter. Under the current regulatory landscape, these companies must therefore secure individual state licenses and conform to a patchwork of inconsistent state-specific regulations. The process is not only expensive and cumbersome for the companies, it also creates a risk of gaps in consumer protections. Beyond compliance with the individual state regimes, many fintech companies must also comply with additional layers of federal regulation and oversight.
Two divergent proposals have emerged to improve the fintech regulatory landscape. First, the Conference of State Bank Supervisors (“CSBS”) announced in 2017 that it would harmonize state regulations by creating a 50-state licensing and supervisory system. As of June 2019, 23 states had committed to this multistate agreement. Second, the Office of the Comptroller of the Currency (“OCC”) announced in July 2018 that it would begin accepting applications for federal special purpose national banking (“SPNB”) charters submitted by nondepository fintechs.
See: No banking charter? No problem. Fintech companies team up with small-town banks
Proponents of the multi-state solution, including the CSBS, have since filed lawsuits against the OCC, alleging the OCC is exceeding its authority to issue SPNB charters. While the CSBS’s lawsuit was ultimately dismissed for lack of standing, the United States District Court for the Southern District of New York (“SDNY”) recently denied the OCC’s motion to dismiss a suit by the New York State Department of Financial Services (“NYDFS”) and signaled its belief that the OCC would exceed its authority if it issues a SPNB charter to a non-depository fintech. The OCC has appealed that decision to the Second Circuit, and the outcome of that appeal – Lacewell v. Office of the Comptroller of Currency – will likely determine what it means to be in the “business of banking” and direct the immediate future of fintech regulation.
The Dual Banking System
The changing definitions and regulations for a “bank” have long been at the core of American financial policy. When declaring that the Second National Bank could not be taxed or controlled by the states, the Supreme Court in McCulloch v. Maryland created the doctrine of “federal preemption.” During the Civil War, Congress passed the National Bank Act of 1864 both to introduce a national currency and establish the OCC to administer federal bank charters to companies in “the business of banking.” The Federal Reserve Act of 1913 created a decentralized central bank and required federally chartered banks to obtain membership and insurance. Developments like these institutionalized a dual banking system of divergent regulatory regimes for national and state banks.
See: What’s a custodian bank do in a blockchain world?
The “business of banking” was traditionally understood as receiving deposits, paying checks, and lending money. The rise of fintech companies offering tangentially related services has forced regulators to expand their conceptions of banking. A consistent trend across all industries, but especially fintech, is that innovation outpaces regulation. Fintech innovation, though, is unique in that its increasing complexity creates very real financial and legal risks for businesses and consumers. For instance, the meteoric rise in internet accessibility and sophistication of mobile applications promises banking ubiquity, but raises questions about how geography-based regulations and disclosure requirements should be applied. And while machine learning and artificial intelligence can deliver faster and more accurate decisionmaking, absent appropriate regulation they could also behave in unintended ways to cause market instability or discriminatory outcomes. As fintech creates more holistic consumer products leveraged on increasingly sophisticated systems, the regulatory regime must adapt to avoid the dual banking system’s incapacity to protect consumers without impeding innovation.
During the early stages of the fintech industry, state chartering was necessarily the default regulatory regime, but it is nonetheless one that provides many benefits. Without federal restrictions on capital raising, fintech companies can invest and expand faster than traditional banks. Competition among the states to attract fintech businesses facilitates business-friendly regulatory schemes that encourage innovation. On the other hand, this is also what created the patchwork of inconsistent compliance regulations and disclosure requirements. Fintech organizations must not only meet these state requirements, but also comply with many federal oversight agencies and legislation. And additional flow-down regulations arise for companies that rely on relationships with banks for access to the payments system. Even if the CSBS succeeds in its efforts to harmonize state regulations, these federal requirements will still apply.
See:
FinTech Charter Hits Speed Bump
OCC sets stage for FinTech firms to charter as national banks
U.S. bank regulator allows fintech firms to seek federal charter
The OCC’s proposal to offer SPNB charters to nondepository fintech companies reflects an expanding view of what constitutes the “business of banking.” The key benefit to becoming federally chartered is the accompanying federal preemption. To be sure, stripping fintech companies of the strictest state requirements will allow them to provide new products while being held to the same fair access and consumer protection standards as national banks. Even so, federal regulations are often less fluid and could limit a fintech company’s opportunities for further innovation. There are a number of other reasons fintech companies might not want to obtain a national charter, as doing so would subject them to federal capital and liquidity requirements, as well as regulatory exams.
Lacewell v. OCC
Only months after the OCC announced in July 2018 that it would begin accepting SPNB charter applications from nondepository fintechs, Maria Vullo, in her capacity as Superintendent of the NYDFS, sued for declaratory and injunctive relief. The NYDFS complaint alleged that the OCC’s actions would destabilize financial markets and put consumers at risk of exploitation from federally-chartered entities “improperly” insulated from New York law.1 Such risks, according to the complaint, include weakening controls on predatory lending practices, creating an unfair competitive advantage for well-capitalized firms, and growing fintechs to become “too big to fail.”2 The complaint also pointed to instances since the 1970’s in which federal courts have checked the OCC’s previous attempts to expand its definition of the “business of banking.”3 The NYDFS suit ultimately requests that the court declare the SPNB charter provision unlawful if applied to non-depository institutions.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
Former SoFi CEO Mike Cagney’s Fintech Startup Pursues Bank Charter
BNN Bloomberg | Adam Tempkin | Nov 6, 2020
Mike Cagney’s blockchain lending startup Figure Technologies Inc. became the latest of a handful of fintech firms to apply for a bank charter in a push to expand its product lines to consumers with less access to traditional credit.
The firm is seeking a national bank charter granted by the Office of the Comptroller of the Currency. The designation would reduce the company’s need for a myriad of state-by-state licenses, allowing it to more easily lend to consumers, Cagney, the former chief executive of Social Finance Inc., commonly known as SoFi, said in an telephone interview.
See: Cambridge Centre for Alternative Finance and World Bank – Study COVID Crisis and Impact on Fintech Regulation
If Friday’s application is granted, the company would be able to market a wider set of consumer products nationwide while focusing its compliance efforts on the requirements of a single regulator.
“It will drive down the cost of delivering our product to those underserved by the financial sector,” Cagney said. “It will allow the consumer to build a credit history and become a mainstream prime borrower.”
A representative for the OCC declined to comment.
Figure, the latest fintech non-bank lender to seek a national bank charter, has plans to securitize some consumer debt generated from the effort. While the OCC has recently become friendlier to fintech companies, bank trade groups and others have pushed back because they fear that the Amazons and Googles of the world will encroach on traditional banking.
The company plans on piloting a small-dollar installment-loan product in January through either credit lines or point-of-sale offerings built on blockchain, Cagney said. The loans will be fed through a master trust, and potentially back revolving asset-backed securities.
Figure joins the likes of Square Inc. and Varo Money Inc. and other fintech firms pursuing traditional banking charters. Other firms such as LendingClub Corp. and Jiko have acquired charters through bank acquisitions.
See: Bank Shot: Canada may be a laggard, but these B.C. fintechs are ready for open banking
Entry into the national banking industry by fintechs and other challengers has met pushback. The New York Department of Financial Services pursued legal action against the Office of the Comptroller of the Currency for offering special-purpose charters for non-depository fintechs.
“There could be some pushback, as the industry is somewhat mixed on it,” Cagney said, noting that the fear is that companies such as Google would enter into traditional banking. “But our idea is that we generate consistent assets at a lower cost, which would be good for the broader banking system.”
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS! |
