TFU | Feb. 11-16

Leading Off

Twenty-two state AGs challenged the CFPB’s proposed fintech sandbox; the Senate Banking Committee is set to examine financial data collection; JPMorgan Chase introduced its own dollar-backed cryptocurrency; President Trump signed an EO setting aside federal funds for AI projects; IBM won a $700M five-year technology deal with Banco Santander; Ant confirmed its acquisition of WorldFirst; and U.K. challenger bank Starling raised £75M in Series C funding.

 

In the News

State AGs challenge CFPB’s fintech sandbox proposal.  22 Democratic state attorneys general (AGs) sent a letter to the Consumer Financial Protection Bureau (CFPB) saying it has “no authority” to create a fintech sandbox, which they argue would create “sweeping immunity [from enforcement] absent formal rulemaking.” The CFPB circulated its proposal for a fintech sandbox in late December.

IBM wins $700m deal with Santander. The five-year technology agreement is part of a global business transformation program at the Spanish bank, which will include transitioning its IT infrastructure toward a hybrid, multi-cloud environment. “IBM’s technology will provide [us] with the flexibility needed to support the constantly evolving business of a bank,” noted Santander’s global CIO.

Trump EO launches American AI Initiative.  The president signed an executive order (EO) establishing a new strategy for guiding AI development in the United States. The Initiative will set aside federal funds for investment in AI research and projects, as well as encourage new, U.S.-led international standards in AI. The administration intends to release a more detailed plan in the next six months.

JPMorgan introduces its own cryptocurrency.  The global bank became the first major U.S. bank to offer its own digital token for real-world use. Each coin will be backed by a dollar in JPM accounts, giving them stable value. The move reflects a reversal for CEO Jamie Dimon, who previously called Bitcoin a “fraud” in 2017.

Apple hints at potential blockchain moves.  The tech giant’s recent SEC filing contained details about its exposure to blockchain, including its involvement in drafting the “Blockchain Guidelines” for an initiative of the Responsible Business Alliance. The filing also notes that Apple chaired the RBA Board and participated in various internal working groups and committees, including “the blockchain team.”

Visa raises MasterCard in the Earthport bidding war. Visa has raised its takeover offer for the U.K. headquartered cross-border payments outfit Earthport from £198 million to £247 million in response to MasterCard’s £233 million bid last week. Visa’s retaliation may force Mastercard back to the table with a higher offer, raising the prospect of a sustained bidding war.

Mastercard gets into blockchain with Token.io partnership.  The global payments giant selected the San Francisco-based crypto startup, based on the Stellar platform, to develop an “open banking hub” that will “connect merchants and retailers to financial services” through a blockchain layer. Token.io aims to “make it as easy to send money globally as it is to send an email or text message.”

Senate to examine financial data collection.  The U.S. Senate Banking Committee requested input on how to give consumers more control of personal information held by financial institutions and regulators; the first step toward a bipartisan bill on the issue. Chairman Mike Crapo (R-ID) said he’s focused on “what data is contained in modern consumer reports . . . and how privacy is respected.”

EU to reduce cross-border payments fees.  The European Parliament voted to “scrap excessive fees” for cross-border Euro payments for EU consumers outside the Eurozone. Banks must also inform consumers of transaction fees in local and domestic currencies at the point of sale. MEP Eva Maydell (EPP, BG) described the rules as “a huge step forward to completing the Single Market for payments.”

Ant Financial confirms WorldFirst takeover.  The Chinese tech giant confirmed its deal to acquire U.K.-based currency transfer operator WorldFirst. WorldFirst shuttered its US operations to ward off any regulatory objections in advance of the alleged $700m acquisition. Founded in 2004 by former Citi bankers, WorldFirst processes over $15 billion a year and employs about 600 people worldwide.

Starling Bank raises £75M.  The U.K. challenger bank raised £75 million in Series C funding, led by Merian Global Investors and an additional investment from sole existing investor Harald McPike. Starling plans to use the funding for its international expansion plans and to support its ambition to “use our technology to build a next-generation global, digital banking platform.”

Rapyd raises $40M for “fintech as a service.”  The London-registered startup, which operates mainly from the U.S. and Israel, announced a $40 million Series B funding round co-led by payments firm Stripe and venture capitalists General Catalyst. Rapyd’s “fintech as a service” platform integrates a number of functions such as payments, currency transfers and ID verification via a single API.

FSB warns banks about BigTech rather than fintech. The Financial Stability Board warned banks to be more worried about the competition and disruption from Big Tech firms rather than fintech startups. The FSB highlighted that new entrants can offer improvements in service quality, but warned that “heightened competition could . . . lead to additional risk taking among incumbents.”

 

 

 

 

 

 

 

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