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Weekly Update

TFU | May 11 – May 17

Dear readers, The Fintech Update will be off next week for Memorial Day in the U.S. and the Spring bank holiday in the UK. We wish you and your families the best for a safe and relaxing long weekend and a great week ahead. Thanks and take care, The Fintech Update team

Leading Off

OCC COO Brian Brooks said the agency may consider offering a “payments charter”; Goldman Sachs is acquiring its second wealth management company in the past two years; the European Central Bank is considering creating a retail central bank digital currency; Telegram shut down its TON blockchain platform and token after a recent court ruling against it; U.S. e-commerce sales jumped 49% in April as compared to March; and Monzo is seeking new funding amid a steep drop in value.

 

In the News

OCC’s Brooks suggests possibility of “payments charter.”  The Office of the Comptroller of the Currency’s (OCC) COO Brian Books suggested that the agency will consider whether “it makes sense . . . to [offer] a non-depository payments charter” in addition to traditional bank charters, which could allow fintech payments firms to trade a patchwork of state regulations for federal oversight.  

Goldman to acquire Folio.  The global bank plans to buy the wealth management custodian and technology company, which would be its second wealth manager acquisition  in two years. The acquisition will give Goldman access to Folio’s technology as well as fees garnered from its $11B assets under custody. Terms of the deal were not disclosed.

ECB exploring “game changer” retail CBDC.  The European Central Bank (ECB) is looking into creating a retail central bank digital currency (CBDC) for the eurozone. According to executive board member Yves Mersch, a wholesale CBDC “would be largely business as usual . . . [but] a retail CBDC, accessible to all, would be a game changer.” A preliminary report is expected in the coming weeks.

Telegram shutters blockchain platform after court ruling.  The messaging service closed its Telegram Open Network (TON) after “a lengthy battle with the U.S. Securities and Exchange Commission (SEC).” The firm recently lost a series of court battles against the SEC over its right to issue its Grams token and transact it via the TON blockchain. Telegram first proposed the TON to investors in 2017.

U.S. e-commerce sales up 49% in April.  According to new data from Adobe’s Digital Economy Index, U.S. e-commerce jumped 49% in April compared to a baseline in early March prior to shelter-in-place restrictions. The jump was largely driven by the boost in online grocery shopping, with a 110% boost in daily sales between March and April.  

Monzo seeks new funding, loses value.  The London-based challenger bank reportedly is looking to raise £70-80 million at a valuation of approximately £1.25 billion, a 40% reduction from its June 2019 valuation. The company has been hit hard by disruptions due to the coronavirus, furloughing 295 employees globally and laying off another 165 amid the closure of its Las Vegas support center.

Temasek joins Libra.  The Singaporean state-backed firm, one of the world’s largest institutional investors, announced it was joining the Libra Association. Temasek is the first Asia-based member of the project as well as its first state-backed member. The move comes after high-profile members dropped out of the project and Libra announced plans to shrink its scope. 

WeChat begins social credit scoring.  The Chinese messaging giant will begin assigning a credit rating to its WeChat Pay customers, algorithmically generating “payment points” based on their “personal and credit records, and habits and other factors said to represent . . . ‘credibility.’” Parent Tencent hopes financial institutions will use WeChat credit reports as part of their standard credit evaluations.

FIS finds that digital-first is the new normal.  The technology provider for financial services firms released the results of a survey illustrating how COVID-19 is reshaping consumer banking and payments behavior. 45% of respondents said they have changed the way they interact with their bank, 31% would continue to use more online banking in the future, and 40% are more likely to shop online. 

UBS seeks China digital bank license.  The Swiss bank hopes to obtain a digital banking license in China so it can launch a digital platform to spur growth and cut costs in the country. UBS expects China’s new framework for digital banking licenses to be in place by June or July. The new rules will also apply to existing digital-only banks such as Tencent-backed WeBank and Alibaba’s MYBank.

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