TFU | Dec. 9 – 15

Leading Off

PayPal sued the CFPB regarding its prepaid card rule; Goldman is planning to launch a small-investment digital wealth management service; PNC blocked data aggregators from using its customers’ data; newly revealed documents showed that, for years, the FBI has secretly demanded consumer information from credit agencies; and Robinhood rolled out fractional share trading.

 

In the News

PayPal sues CFPB over prepaid card rule.  The payments giant filed suit in US District Court, challenging rules promulgated by the Consumer Financial Protection Bureau (CFPB) that require digital wallets to comply with the same consumer protections as prepaid credit cards. PayPal argues that the CFPB rules force it to make “misleading and confusing” disclosures to customers.

Goldman to launch small-investment robo-advisory service.  Goldman Sachs plans to roll out a new digital wealth management service next year, targeting “clients with as little as [$5,000] to invest.” The new offering is in line with Goldman’s recent moves into small-dollar consumer financial services, such as its Marcus brand or its investment in British digital wealth advisor Nutmeg.

PNC limits fintech access to customer data.  Citing security concerns, PNC has blocked data aggregators such as Plaid from access customer accounts and routing data. Blocking Plaid has left PNC customers unable to access financial apps like Venmo. The dispute is emblematic of competition over customer data: necessary for fintechs to provide their services but guarded by traditional banks. 

FBI demanded information from credit agencies.  Newly released documents reveal that the FBI has secretly engaged in a years-long practice of demanding consumer financial information from the largest U.S. credit agencies. The FBI issued national security letters to the agencies, compelling them to hand over information. Senators are now asking agencies why they failed to disclose these demands.

Robinhood rolls out fractional share trading.   The digital stock trading app now allows users to buy as little as one-millionth of a share, rounded to the nearest $0.01, with zero fee. The announcement comes on the heels of Square Cash’s own fractional share trading announcement, with Robinhood’s service effectively undercutting its competitor. Betterment has offered fractional investing since 2010.

Credit unions test out blockchain-based digital ID system.  Several U.S. credit unions pilot tested CULedger’s MyCUID digital identity service, using the system to identify high-risk transactions at their call centers and verify identities using facial recognition, fingerprint, and voiceprint.  The service helped reduce the time required to verify members from “50 seconds to 10 or less.”

Saga launches Libra-like stablecoin.  The U.K.-based firm is launching SGA, a new stablecoin pegged to the same basket of currencies designated by the International Monetary Fund (IMF) for special drawing rights. Saga says SGA is more “democratic” than Libra, since it will not profit from the coin. Saga also is emphasizing “banking-grade compliance” and strong AML checks for its new service.

Lithuanian central bank steps up research into digital currency.   The Bank of Lithuania published a research paper outlining design choices for central bank digital currencies and their implications for monetary policy and financial stability [full text]. Board member Marius Jurgilas said central banks must embrace new technology and not rely on “solutions of the past.”

HSBC to offer bank accounts for the homeless.  The global bank is working with charities in the UK to help people without photo IDs or addresses to open bank accounts. Anyone interested in the service can register with one of the partner charities and use its address to open a bank account, ultimately helping the homeless “receive wages and claim benefits” and give “their independence back.”

Hong Kong’s WeLab raises $156M. The Hong Kong-based mobile lender, which was awarded a Hong Kong virtual banking license earlier this year, said it raised $156 million in Series C funding, led by Alibaba Hong Kong Entrepreneurs Fund and China Construction Bank. The company was awarded the license in April and is expected to launch WeLab Bank in 2020. 

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