TFU | Oct. 21 – 27

Leading Off

A federal judge ruled in favor of the NYDFS in its ongoing suit to prevent the OCC’s “fintech charter”; Mark Zuckerberg testified before Congress about Libra; Apple Pay is now the most popular U.S. mobile payments app; Kabbage expanded its product mix to include payments; Revolut launched in Singapore; and the Economist considers whether negative press and regulatory scrutiny have doomed the Libra project.


In the News

Court sides with NYDFS against OCC fintech charter.  Judge Victor Marrero of the U.S. District Court for the Southern District of New York ruled for the New York State Department of Financial Services in its suit against the Office of the Comptroller of Currency (OCC) over the OCC’s proposal to grant special purpose charters to fintechs, stating that the OCC lacks the power to grant bank charters to nonbank entities that are ineligible for federal deposit insurance. The OCC said it plans to appeal the decision.

Zuckerberg defends Libra to Congress.  Facebook CEO Mark Zuckerberg appeared before the House Financial Services Committee to discuss Libra, the Facebook-backed cryptocurrency that has been met with increasing skepticism since being announced in July. Zuckerberg defended the project, while also responding to a variety of other topics, including Facebook’s political ads policy and its diversity. 

Four U.S. regulators join GFIN.  The Federal Deposit Insurance Corp. (FDIC), Office of the Comptroller of the Currency (OCC), Commodity Futures Trading Commission (CFTC), and Securities and Exchange Commission (SEC) joined the Global Financial Innovation Network (GFIN), an organization of financial regulators aimed at sharing information and coordinating responses to global fintech developments.

Apple Pay overtakes Starbucks in mobile payments.  According to eMarketer, Apple Pay has overtaken Starbucks in the as the most popular U.S. mobile payment app, uprooting Starbucks from its long held spot at the top. Apple Pay has gradually become increasingly ubiquitous as American retailers have adopted new point-of-sale systems compatible with NFC signals.

More firms are using AI in lending operations.  The American Banker highlights that lenders ranging from fintechs (e.g., Kabbage) to auto lenders (e.g., Ford Motor Credit) and regional banks (e.g., First National Bank of Omaha) are increasingly using AI tools to make loan decisions. While most lenders still rely on traditional factors, the AB notes that “there are signs that is starting to change.”

Chinese president urges country to use blockchain.  Saying that blockchain could be applied to an array of uses in China, President Xi Jinping and called on his country to seize the technology’s potential through top-down implementation and appropriate guidance and regulation. Cryptocurrency has been banned in China since 2017, but China’s central bank is preparing to debut its own. 

Instabase raises $105M, becomes unicorn.  The San Francisco-based platform, which supports banks and other firms with building business applications, raised $105 million in Series B funding round, achieving a $1 billion valuation. Instabase works with many of the top-10 U.S. banks, and Standard Chartered selected it to “automate its client onboarding, credit documentation, and KYC processes.”

Starling Bank raises £30M.  The UK challenger bank raised an additional £30 million in its latest funding round, which it will use to improve its B2B offering and support expansion into new European markets. Starling has grown rapidly since its founding and now is approaching a customer base of one million consumers.  

Kabbage expands into payments.  The online small business lender is adding to its product mix with Kabbage Pay, which will give customers “the ability to create, send and manage invoices through an online portal” and manage money and payment activity via a dashboard. Kabbage successfully a beta test with existing customers and now will be rolled out to the firm’s entire customer loan portfolio.

Revolut launches in Singapore.  The U.K.-based digital bank, which already operates throughout Europe and Australia, and which plans to launch in North America later this year, went live in Singapore following an extended beta test. The company already has 30,000 customers already onboard in Singapore. 

Is Libra doomed?  The Economist looks at whether political and regulatory backlash, and the departure of multiple partners from the Libra Association, has doomed the cryptocurrency. Facebook’s own reputation, Libra’s potential attractiveness to money launders, and uncertainty around how the currency will actually work has led to suggestions that global regulators will block Libra.

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