TFU | Sept. 30 – Oct. 6

Leading Off

E-Trade followed Charles Schwab and TD Ameritrade in dropping its transaction commission fees; PayPal has withdrawn from the Libra Association amid regulatory and legal concerns, and others may follow; the FSB is scrutinizing the concentration of bank services in three major cloud providers; PayPal became the first non-Chinese company to gain a Chinese payments license; and a Wells Fargo study concluded that new technologies will replace 200,000 bank jobs in the next decade.

 

In the News

E-Trade joins competitors, drops commission fees.  Beginning October 7, the online retail brokerage will offer fee-free transactions on U.S. stock, ETF and options trades, joining competitors Charles Schwab and TD Ameritrade, which dropped their commission fees only days earlier. E-Trade estimates that its new fee structure will cost it $75 million in quarterly revenue going forward.

Libra loses PayPal, may lose others.  The hits keep coming for the Facebook-backed cryptocurrency, which has battled numerous regulatory and business challenges since being announced in June: PayPal announced that it is withdrawing from the currency’s governing Libra Association, while Visa and Mastercard reportedly also are considering withdrawing due to regulatory and legal concerns.

FSB is scrutinizing bank cloud services.  According to U.S. Federal Reserve Governor Lael Brainard, the Financial Stability Board (FSB) is reviewing banks’ reliance on third-party cloud providers. Amazon Web Services, Microsoft Azure, and Google’s Alphabet Cloud make up 57%, and the FSB is concerned about the “concentration of these providers” and what it means for bank cyber resilience.

PayPal becomes first foreign firm with Chinese payments license.  The online payments giant is the first foreign company to get a Chinese payments license, after China’s central bank approved PayPal’s purchase of a 70% stake in payments group Guofubao. Foreign financial services firms have long been frozen out of China, but recent approvals for Amex and PayPal may signal a potential thaw.

Crypto-derivative products draw scrutiny.  The U.K.’s Financial Conduct Authority (FCA) is proposing a blanket ban on the sale of crypto-derivatives to retail investors. Estimating that investors in Britain lost £371M on such products in an 18-month span, the FCA thinks the proposed ban could save consumers up to £234M a year. A final decision is expected in 2020.

The rise of the robo-advisers.  The Economist notes that funds run by computers now account for 35% of America’s stock market, 60% of institutional equity assets, and 60% of trading activity. While the rise of automation has democratized finance by cutting costs, robo-advisory tools also raise concerns about financial stability, wealth concentration, and corporate governance.

WF study says tech will replace 200K bank jobs.  According to a study conducted by Wells Fargo (WF), the implementation of new technologies in the U.S. banking industry is expected to drive 200,000 job cuts in the next decade, which would be the biggest headcount reduction in U.S. banking history. Back office functions, bank branches, and call centers are expected to be the most affected areas.

Revolut partners with Visa, will hire 3,500 new staff.  The London-based digital bank inked a new deal with the global payments processor, which will help Revolut expand in the U.S. and Singapore by the end of the year, followed by Canada and Japan next year. Revolut also expects to hire 3,500 new staff to support its global expansion into 24 new markets, aiming for 5,000 total staff by next summer.

Samsung Pay introduces prepaid card, international transfers.  The tech giant introduced Samsung Pay Cash, a virtual prepaid card within the Samsung Pay app designed to help users manage their spending and budgets. Samsung also rolled out in-app international money transfers, allowing U.S.-based users to send money to recipients in 47 countries.

Credit Karma launches savings account.  The personal finance firm will roll out a new savings account for U.S. customers in late October. The account, the company’s first financial product, will be FDIC-insured and offered through custodian MVB Bank. Credit Karma says the savings account will be another way to advance its mission of helping consumers better manage their finances.

Dave raises $50M, becomes unicorn.  The Los Angeles-based digital banking startup brought in $50 million from Norwest, valuing the two-year-old firm at $1 billion. Dave launched in 2017 with a “suite of money management tools to save consumers from overdraft fees” and was a winner of that year’s JPMorgan FinLab Challenge. Dave plans to significantly expand its product offerings in the next year.

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