The CEO and Co-Founder of TrueAccord discusses why a new data driven approach to debt collection is far more effective than traditional methods. Source
Mission based digital banking startup Varo Money secured their second significant round of the last two years by raising $45mn; investors in the round include The Rise Fund, led by U2 ‘s lead singer Bono, and Warburg Pincus who also helped to lead their first round; Varo applied for a national bank charter in July and plans to use the money for hiring, product development and marketing. Source.
Looking to make their consumer lending product more appealing Goldman Sach’s Marcus is now offering loans for home improvement; the bulk of their loans have thus far been originated for debt consolidation; with more banks entering the space and the non bank lenders who have come on the scene since the financial crisis Marcus is looking to differentiate their initial offering; this is a trend across the fintech market as competition has forced firms to try to make products unique. Source.
As banks look to update legacy technology or partner with fintechs they have turned to consultants for advice; consulting firms like BCG, Accenture and the big four accounting firms, KPMG, PwC, Deloitte and EY have all been called upon to help structure deals or provide banks with advice on regulatory updates; financial institutions are relying on these consultants to help banks implement the technology changes and to adapt quicker as they can help bring knowledge from data scientists or app designers. Source.
Consumers have submitted hundreds of complaints about the p2p payments app because they are unable to sign up or access money that was sent to them; the reason behind the issues is Zelle’s security structure is very similar to that of a bank; if something doesn’t match perfectly or the users bank is outside the Zelle network then its possible they will not be able to sign on; Zelle initially launched inside their bank network only, but in September they launched their stand alone app and thats when the issues began; the company is looking at improving the process but says they will not compromise their security. Source.
Business Insider reports on the success of Bank of America’s investment in digital channels; reports that they added about 2 million users to digital channels, predominantly to mobile; mobile channel usage rose 34% year over year; article also compares active mobile users across competing banks Wells Fargo and JP Morgan. Source
The new loan product is helping Americans get quick access to cash but it is not entirely free. Source
Capital One announced last year that they were exiting the mortgage and home equity originations business; some of those employees are landing at Flagstar bank to expand their direct lending operation; Kristy Fercho, president of mortgage for Flagstar stated, “Capital One built a best-in-class digital platform, so we are excited about attracting this proven, high-caliber team in the direct-to-consumer space to Flagstar.” Source
The new CFPB director Mick Mulvaney is planning to rollback a key regulation that will allow payday lenders to charge very high interest rates; the current rule was set to be enacted soon and allow for lenders to become compliant by the middle of 2019; the rule limited the amount of money or the amount of times a person could borrow from these short term lenders; with the removal of the rule payday lenders can go back to operating like they did prior to the CFPB; many fear that lower income Americans will become mired in debt. Source.
Banks have historically been the guardians of customer information, but that has started to change with open banking; opening up information to third parties via customers has led banks to think more and more about security breaches; Now it’s not just about building a wall and not letting anyone in,” said Ram Bose, global retail banking consulting leader at Genpact, to TearSheet. “It’s about building a filter or strainer that lets some things in or out and not other things.”; the UK has regulations that mandate the sharing of info but the US has only set out standards and banks have been doing one off deals; new technologies like AI and machine learning can help to better secure agreements when banks are working with 20 or more potential partners; it is early days but banks can help to set up the standards they use by working together with fintechs and regulators. Source.