TFU | April 22-28, 2017

Leading Off

The Conference of State Bank Supervisors filed suit against the OCC over the agency’s proposal to issue special-purpose banking licenses to fintech firms; Recode reports on Apple’s rumored launch of an iPhone-to-iPhone digital money-transfer service to rival Paypal’s Venmo; Stock trading app Robinhood raised $110 million, valuing the firm at over $1 billion; the WSJ writes on the rise of financial mapmaking and advanced network analytics that provides financial firms and regulators new tools to spot crises; and House Financial Services Vice Chairman Patrick McHenry opines on the CFPB’s Project Catalyst.

In the News This Week…

Conference of State Bank Supervisors sues OCC.  An industry group representing all 50 state banking regulators filed suit against the federal agency in an effort to prevent it from issuing specialty national banking licenses to fintech firms. The Conference, which “has rarely gone to court against a federal regulator,” argues that the OCC is reaching beyond its jurisdiction and only has the authority to grant licenses to nonbanks that take deposits, reports the WSJ.

Apple may launch digital money-transfer service. Recode reports that Apple is rekindling its “on-again, off-again flirtation” with creating a Venmo-like payment service allowing iPhone users to send money digitally to other iPhone users. According to Recode’s sources, Apple has held discussions with industry partners and some expect the service to launch later this year.

Financial mapmaking helps firms and regulators spot crises. The WSJ profiles Kimmo Soramäki, a network specialist and founder of Financial Network Analytics, who is employing new modeling approaches to spot weaknesses in bank stress-testing and financial markets as part of “a growing area of research that is changing how regulators and banks manage financial risk.”

Robinhood raises $110 million.  The four-year-old stock trading app, which does not take a commission on trades, now claims over two million monthly users. The latest funding round values the firm at $1.3 billion and includes existing investors NEA, Index Ventures, and Ribbit Capital.

Rep. Patrick McHenry opines on Project Catalyst. McHenry says the Consumer Financial Protection Bureau’s Project Catalyst, an initiative launched in 2012 to test new financial products and foster collaboration between the agency and fintech firms, is a “failed experiment.”  He believes Project Catalyst requires more regulatory flexibility, and aims his sharpest criticism at the project’s no-action letter policy, which he says is “barely worth the paper it was written on.”

Fintech apps help financially stressed families.  Mobile apps Even (income volatility), Digit (savings plans), and Prism (bill tracking) are employing new technology to help ease the financial burden on households of modest means. While these firms are benefiting from bank partnerships and venture backing, their widespread adoption is being hampered by the need for state-by-state regulatory approvals that are “costly and time-consuming.”

VC firms use predictive computing to improve decision-making. As Wall Street increasingly relies on algorithmic trading instead of human asset managers, venture capital firms are adopting a new computer-driven approach toward investing that “mirrors Wall Street’s recognition that computers do some things not only faster but also better than people when it comes to crunching gigantic sets of data.”

SoFi faces pressure from rising short-term rates. The online lender, known for pioneering student debt consolidation, is facing shrinking interest-rate savings on student-loan refinancing as short-term rates have started to move higher. SoFi’s CEO Mike Cagney, who’s “been vocal about the limited time-span on this market,” has pushed the firm’s expansion into new loans and products.

JPMorgan exits R3 CEV blockchain group.  Following in the footsteps of Goldman Sachs, Morgan Stanley, and Banco Santander, JPMorgan is the latest major bank to leave the consortium, which represents nearly 80 financial firms. R3 spokesperson Charley Cooper said JPMorgan is parting ways “to pursue a very distinct technology path which is at odds with the one chosen by [R3].”

Ant Financial partners with ofo on mobile payments.  The Chinese payments firm behind Alipay and the Sesame Credit credit-rating system is investing an undisclosed amount into ofo, the world’s largest bike sharing platform. As part of the investment, Ant Financial will offer mobile and credit card payments services as well as strategic advice on ofo’s international expansion.

U.K’s FCA seeks regional fintech hubs. In a speech to the Leeds Digital Festival [full text], Christopher Woolard, the FCA’s Executive Director of Strategy and Competition, said they’re working to ensure that the “[fintech] phenomenon can spread far beyond London” by offering regulatory services to fintech firms in Leeds, Manchester, Edinburgh, and Glasgow.

Have a great weekend!
Joe Oehmke and Austin Tuell

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