Siri who? #Cleo, a London-based #fintech startup that has developed a virtual assistant for personal finance, just raised $ 700,000 in a round of #seed funding from intrigued angels. According to Crunchbase, one of those angels is Niklas Zennström, whom some might remember as the mind (and founder) of video-chat service Skype.Read More
Bank Innovation
Here there be dragons, and they’ve started to rule over unicorns—well, in matters of #funding, anyway. According to a new report released by Citigroup on digital disruption, the second of its kind, #China has now overtaken the U.S. to claim the No. 1 spot for investments in #fintech on a global scale.Read More
Bank Innovation
#Mobility has been the most crucial innovation driver in the financial world, fostering partnerships among #fintech upstarts and traditional FIs. Today, mobility is disrupting transportation and altering the way people and things move around a connected, digital, social-networked world. To track that trend, #Royal #Media – Bank Innovation’s parent company – launchedRead More
Bank Innovation
As it turns out, this past week was the wrong week to quit sniffing glue. You will be mistaken if you think I am alluding to various political gatherings that occurred first in the United States then all over the world. Nothing could be further from my mind. Of course I am alluding to the itsy-bitsy bit of news the Telegraph planted in this article. And before you believe I allude to the momentous piece of news where we learn President Trump refers to Prime Minister May as “my Maggie”, then you shall have to guess again.
Let me put you out of your misery. I am referring to the &8220;#passporting&8221; system bombshell, and no, I am not referring to the EU passporting system. Let me put me out of my misery. I am referring to the US-UK passporting system bombshell, and I quote the Telegraph: &8220;Donald Trip is planning a new deal for Britain… The historic trip comes as: – A deal to reduce barriers between American and British #banks through a new &8220;passporting&8221; system was considered by Mr Trump’s team&8230;&8221;
Try that #gambit on for size.
I did and the thoughts swirling in my mind at the speed of light ended up making me dizzy.
First, given this is the Telegraph, I discounted the possibility of fake news. Second, we all know Trump has not been tender with the EU, so the possibility of sticking it to European countries by weakening them and creating further uncertainty cannot be discounted entirely. Third, Trump has now put the world on notice we have entered a new era of bilateral deals and America first, and a special deal with the UK, on the back of the Brexit vote and what can only be tense negotiations with the EU certainly fits the bill. Fourth, such a passporting system may benefit US banks in light of the threat Brexit poses them by coupling London and NYC as capital markets brethren &8211; do note that several Trump nominees are former Goldman Sachs partners, most notably the Treasury Secretary nominee. Fifth, the US and EU have had recent trade disagreements, notably around the safe harbor agreement on overseas data transfers, thusly a banking passporting system threat may be a useful bargaining chip with the EU in the near future. Sixth, any weakening of the EU may further Trump&8217;s plan for rapprochement with Russia &8211; arguably the UK &8220;elite&8221; is not on the same wavelength. Seventh, we may be witnessing a Trump judo move aimed at softening the EU intransigent stance and, indirectly, secure more favorable Brexit terms for the UK, especially for the financial services industry &8211; this would indeed be masterful. Eighth, could this move be part of the upcoming currency wars &8211; surely this piece of news has the potential of strengthening the pound and weakening the Euro this coming week. I am sure we can come up with many more potential meta reasons for this move and I am looking forward to your comments and ideas.
Let&8217;s us now switch to more practical matters. How easy would it be to build a financial services passporting system between the US and the UK. Fairly easy on the UK side given there is only one financial regulator, the FCA. Less so on the US side given we are dealing with several federal regulators (the OCC, the Federal Reserve, the FDIC, the CFPB, FinCen to name the main ones) and 50 state regulators on the banking side, as well as 50 state examiners on the insurance side. Quite a complicated landscape. For those who have followed the push back state regulators made recently once the OCC revealed its plans for a #fintech charter, think of the issues raised by a federal level passporting system pushed by the Trump administration. Obviously, we will need to figure out the details of a potential passporting system. Will it cover only banks, and if so apply only to national charters on the US side? Will it cover broker/dealers, asset managers, payments companies and even startups too, let alone insurers? How wide will be the mandate, how deep? The devil will be in the details, as usual.
It is a truism to state that trade deals covering products are &8220;easy&8221; to ink, not so with services and last I checked banks or insurers are in the financial services industry. I am no expert but I suspect current international trade treaties will have to be scrutinized to analyze potential conflicts or limits &8211; to be broken or renegotiated? We should also think of any implication and consequences, intended or not, with Basel III and other global financial services accords.
Further, UK financial regulators have historically had a principles based approach vs the US regulators&8217; rules based one. Two things to note here: a) UK financial regulation is based off of and integrated with EU directives and laws, and b) US regulators have recently toyed with the idea of moving towards principles. Be that as it may, it is clear a US-UK deal that includes a passporting system for financial services industry participants will have to wait for the UK to disentangle itself from the EU.
A few other thoughts intrigue me. We all know the FCA&8217;s ground breaking initiative with its approach to fintech and financial innovation in general and its sandbox in particular. If a passporting system allows for a transfer of knowledge and purpose and US regulators espouse new ways to engage with #technology and innovation, then I am all for it &8211; note to all, US regulators abhor the word &8220;sandbox&8221;. As my friend Mariano Belinky from Santander InnoVentures stresses, the US banking market is saturated, certainly so on the retail side. It is also fragmented. The UK banking market is highly concentrated. What would be the consequences of passporting for both markets on the retail side? The US banking market has seen few if not any new banking licenses granted of late. New entrants spur innovation and competitions is, in my opinion, somewhat stale in the US. On the other hand, the FCA has now allowed a certain number of challenger banks in the UK to foster innovation and enable competition. If another byproduct of passporting means the US shores will see more challenger banks, I am all for it. Finally, if passporting talks usher an era of simplification and integration between US regulators, as well as be the impetus for global regulatory rethinking, then I will become a huge fan &8211; London+NYC is a rather formidable financial services axis. The deregulation touted by Trump may not be enough alone to usher a new regulatory era in the US. Add a new alliance to the anticipated demise of Dodd Frank and all bets are off. On the other hand, I wonder if the FCA is or will be a champion of deregulation for deregulation&8217;s sake. If smart deregulation ends up permeating both sides of the Atlantic while speaking a different but common language &8211; regulatory and linguistically speaking &8211; then I am all for it.
Be that as it may, and we need to be cautious given we know so little, we can say the possibilities are as endless as the volatility created by this announcement is high. On the other hand, this may turn out to be one of many crazy ideas without a future. Welcome to a fascinating 4 years trip.
Yes, it is almost impossible to keep tabs on all the new entrants of the wonderful world of #fintech. But taking it one step (or five) at a time, #should be enough to keep you up to date for many of the latest trends in the space. So, if you areRead More
Bank Innovation
When it comes to #banks, only 26% of Americans strongly agreed with the statement that banks had their best interests well in hand according to a recent report conducted by Salesforce—and unfortunately, the survey respondents do not seem to be making the same clear-cut distinctions between banking and #fintech thatRead More
Bank Innovation
Everything that happened in #fintech this week in the U.K. is just plain wrong. #Funding #Circle raised $ 100 million for its peer-to-peer lending platform AND notched record lending activity in the final quarter of 2016 — AND pushed its U.K. operation into profitability. Brexit? Shmexit. Oh, the indignity of it.Read More
Bank Innovation
The time when #banks feared #fintechs has (mostly) been left behind. Today, many banks have formed innovation arms or incubators in order to facilitate the #fintech/bank relationship. However, scoring a match is still complex. What can fintech startups do, to boost their chances? TD Bank’s Julie Pukas, head of U.S.Read More
Bank Innovation
It’s possible that if we did nothing, the problem will eventually work itself out, but if you look around most conferences these days, there are very few people of color. #Banks and #fintech companies offer a robust, growing segment of the economy – what will it take to convince peopleRead More
Bank Innovation
Top #seed #investors in the New #York startup community showed their muscle in the final quarter of #2016 and are likely to continue doing so in the coming year, says a new report from Primary Venture Partners. Among the winners in an otherwise difficult year for startups were #fintech companies likeRead More
Bank Innovation
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