Brett King developed his company Moven as a better solution to banking; after gaining only 60,000 customers since the digital bank's launch, he is now selling the software to banks for use in mobile apps; Moven and many other digital bank competitors are losing some of their appeal in the startup space as the Trump administration seeks to ease banking regulations that resulted in less risk taking from banks and greater opportunities for startups; as the landscape changes under the new presidential administration, it's likely that the latitude and interest from banks in partnering with startups will increase. Source
Technology and financial services innovation continue to create new market opportunities in a number of different ways; leading US tech companies Google, Amazon, Facebook and Apple (GAFA) have already begun to introduce financial services and some believe they could significantly disrupt the traditional financial system; the Financial Times outlines current activities from GAFA and also notes similarities to Ant Financial's plans in China; as services from these tech companies continue to expand into payments and other forms of financial services, market speculators believe one of the GAFA companies could even potentially buy a bank; while regulatory constraints and low ROE make this option unlikely, customers have expressed their increasing loyalty and trust in the GAFA companies; a report from Accenture says one in three global banking and insurance customers would switch their accounts to Google, Amazon or Facebook; while buying a bank could potentially be the extreme, given PSD2 changes in the UK and consumers interest overall it is likely that these companies will expand further into new types of payment technologies and fintech services in the near future. Source
Large banks are reporting excess capital of greater than $120 billion and in the current market environment are expected to increase buybacks and dividends for the benefit of shareholders; the increased capital is primarily the result of higher Federal Reserve capital requirements for banks following the financial crisis; the higher requirements have helped to increase banking capital ratios to more than 12% of risk weighted assets from 5.5% in 2009; under the new administration, capital ratios are likely to be lowered resulting in more capital returned to shareholders; the Fed's influence is also trending towards lower capital requirements specifically in their 2017 stress test guidelines and also following the resignation of the Fed's lead supervisor, Dan Tarullo. Source
A new global survey report titled, "Blockchain Technology: From Hype to Reality," shows 80% of banks surveyed expect to utilize some type of blockchain technology by 2020; 50% of banks say they have already invested or are planning to invest in blockchain technology in 2017; these financial institutions are reporting an average blockchain investment of $1 million in 2017; according to the report, the top five use cases for blockchain are cross border payments, digital identity management, clearing and settlement, letter of credit processing and syndication of loans. Source
Congressman Patrick McHenry and Congressman Jeb Hensarling have both released comments supporting President Donald Trump's executive order on Dodd-Frank; the executive order on Dodd-Frank signed on Friday outlines core principles for regulating the United States financial system and asks the Treasury secretary and regulators to come up with a plan for replacing Dodd-Frank; Congressman Jeb Hensarling has proposed the Financial Choice Act to overhaul Dodd-Frank; if new policies are enacted it would ease lending requirements for banks making credit more available for consumers and small businesses from mainstream financial institutions. Source
UK bank lending and mortgage approvals increased in January as rates remained low for borrowers; according to data from the British Bankers Association, consumer borrowing doubled from December to an increase of 538 million British pounds ($673 million) with loan growth in personal loans and overdrafts reporting an eight month high of 422 million British pounds ($527.9 million); bank lending to businesses also reported its highest increase since January 2015 at 3.4 billion British pounds ($4.25 billion); mortgage approvals were also significantly higher at 44,657 with total mortgage borrowing at 13.8 billion British pounds ($17.26 billion) and refinancing approvals up 15.7% from January 2016. Source
The current market perspective is that banks aren't lending because of regulatory constraints; President Donald Trump even says that many of his friends in the business world would like to borrow money but can't because of regulatory restrictions; while market statistics show that banks are lending and have been doing so at an increasingly higher rate, it is true that there are constraints; however insight from the New York Times suggests that efforts to deregulate could be futile and that with lower capital requirements banks would instead prefer to use capital for increasing dividends and stock buybacks. Source
Lisa Servon worked at a check cashing store to identify its benefits and whether or not the financial system should direct consumers to banking services which have previously been cited as less expensive and more efficient; in her experience at RiteCheck Cashing, Servon found three factors that influenced the use of check cashers by the underbanked; costs were lower in comparison to the fees and charges from using a bank; pricing transparency was more clearly provided for check cashing services; many customers also reported better service from check cashing tellers than bank representatives; Servon has published a book titled "The Unbanking of America: How the New Middle Class Survives" which provides full details on the benefits of using check cashing services. Source
SoFi has partnered with Promontory Interfinancial Network to help facilitate community bank investments in SoFi loans; Promontory Interfinancial Network will provide due diligence support for community banks; the Promontory Interfinancial Network includes a network of thousands of banks; for the partnership Promontory Interfinancial Network commissioned Promontory Financial Group (recently acquired by IBM) to provide a review and report on SoFi's underwriting, operations and systems to Promontory Interfinancial Network's banks for deal support; according to SoFi, the program will provide a gateway for small to mid-sized banks' participation in marketplace lending investment; Promontory Interfinancial Network will make SoFi's loan program information available for its bank network on its loan marketplace, Bank Assetpoint; network banks will not incur any additional charges for loan investment through the network and SoFi will pay Promontory Interfinancial Network a fee for each transaction. Source
As more and more countries begin implementing biometric technology at their borders, banks are also beginning to use fingerprint analysis and retina scans to verify identities; Canada has used their NEXUS program to track travelers and India has used the Aadhaar program to identify their population; banks have begun testing out these technologies to see what fits their customer best: fingerprints, retina or facial recognition; with the new technology still comes age old issues of theft; stealing a fingerprint then changing it can happen just like the changing of a password; banks are still trying to figure out how to address the new technology and learning lessons from border patrol is one way for them to ensure the best solution. Source