#Digital Banking

[justinspoliticalcorner]

Adam Clark Estes at Vox:

Some people collect coins or stamps. For a time, I collected debit cards. Not stolen ones! Each one of them had my name on them, right below the logo of the latest banking app I’d decided to try out: Venmo, Cash App, Chime, Varo, Current, Acorns. For the better part of a decade, I did all my banking through these apps, enjoying their slick user experience and lack of fees. The problem with every one of them, however, is that they’re not chartered banks. If the company behind the app went bankrupt, the Federal Deposit Insurance Corporation (FDIC) would not necessarily come to my rescue. This disaster scenario was a hypothetical worry when I eventually settled for Chase and its FDIC insurance. For millions of others, it became a reality earlier this year when a company called Synapse collapsed and froze them out of their accounts. Users of Yotta, a popular savings app with a built-in lottery, and other apps that relied on Synapse to help manage their accounts couldn’t access their money for months. Now, as hundreds of thousands of Synapse customers’ dollars remain in limbo, Sens. Elizabeth Warren (D-MA) and Chris Van Hollen (D-MD) are calling for banking reforms, and the FDIC is proposing changes to its rules.

Still, a growing number of people are embracing these financial technology, or fintech, services. More than a third of Gen Z and millennials used a fintech app or a digital bank as their primary checking account, according to a 2023 Cornerstone Advisors study. So some questions are worth asking: Is it a bad idea to use an app like Venmo as your main bank? Are digital banks like Chime trustworthy enough? The answer to both questions is yes. Venmo is not a bank, and using it as your primary checking account comes with some risks. Some fintech companies, like Chime, are just as big as traditional banks and offer some nice perks. Again, because they’re nontraditional, there are risks. “You’re not going to go back to a world where everybody works with a small bank and walks into a branch,” Shamir Karkal, co-founder of Simple, one of the first digital banks. “The future is just going to be more fintech, and I think we all just need to get better at it.”

Neobanks and money transmitters, briefly explained

The term fintech can refer to a lot of things, but when you’re talking about everyday services for everyday people, it typically refers to either neobanks or money transmitters. Chime is a neobank. Venmo is a money transmitter. They’re regulated in different ways, but because most of these companies issue debit cards, many people treat them like checking accounts. Fintech apps are not the same thing as FDIC-insured banks.

Neobanks are fintech companies that offer services like checking accounts in partnership with chartered banks, which are FDIC-insured. Neobanks sometimes enlist intermediaries known as banking-as-a-service, or BaaS, companies, which are not FDIC-insured. Still, you will often see the FDIC logo on neobank websites, just like you see it stuck to the glass doors of many brick-and-mortar banks. That logo instills trust, and thanks to their partnerships, neobanks can claim some FDIC protections. But because they do not have bank charters, these neobanks and BaaS companies are not directly FDIC-insured. Instead, neobank customers can be eligible for something called pass-through deposit insurance coverage.

[...] Money transmitters, also known as money services businesses, are even further removed from the perceived safety of the FDIC. Put bluntly, if you’re keeping all your money in a Venmo or Cash App account, you don’t qualify for FDIC insurance. Money transmitters are not neobanks or banks at all but rather completely different legal entities that are regulated by individual states as well as the Department of the Treasury. There are certain protections provided by these agencies, but FDIC insurance is not one of them. So when an app like Yotta or Chime says on its website that it’s FDIC insured, it’s not a lie, but it’s not necessarily true either. Venmo, to its credit, admits in the fine print of its homepage that its parent company PayPal “is not a bank” and “is not FDIC insured.” To confuse you even more, however, certain PayPal services that enlist a chartered bank partner, like a PayPal Mastercard or savings account, might qualify for FDIC insurance. Again, it depends.

[...] That doesn’t necessarily mean that all neobanks and fintech companies are untrustworthy. In some cases, the sheer size and track record of fintech companies can instill quite a bit of trust. Chime, the largest digital bank with roughly 22 million customers, scored a $25 billion valuation in its latest round of funding and is planning to go public next year. Venmo’s parent company, PayPal, is widely considered safe and trustworthy. And don’t expect Block, the $42 billion company that owns Cash App as well as its own chartered bank, to fail any time soon. The truth is, even if there is some false sense of security, fintech apps offer certain customers features that big banks can’t or won’t. One thing that’s made Chime and many other neobanks so popular, for instance, is that they don’t charge so many fees. That’s a huge boon to young people as well as people without bank accounts. If a fintech app is your only option, then you might not care so much about FDIC insurance.

“If you’re poor in America and you’re banking at Chase or Wells Fargo, you’re going to get overdraft fees, minimum balance fees,” Mikula explained. “So there is a real need that [fintech] companies fulfill as a result of your establishment banks essentially not wanting to bank poor people because it’s difficult to do profitably.” As many as 6 percent of Americans were living without a bank account in 2023, according to Federal Reserve data. That share grows to 23 percent for those making less than $23,000 a year. The unbanked population, which disproportionately comprises Black, Hispanic, and undocumented people, is at a greater risk of falling victim to predatory lending practices, including payday loans. Some fintech companies also offer short-term loans, though they’ve been criticized for being predatory as well.

If you have Venmo, Cash App, Zelle, or any fintech or digital banking app, be aware: don’t use them as your primary checking account.

[tumovs]

Goldman Sachs’ foray into consumer #banking in 2016 was quickly heralded as (and seemed to be) a great success. A few days ago, the bank announced an almost $3 billion loss from that business. Let’s take a look.

Despite the initial skepticism, Marcus proved a huge success: by 2020, Marcus was one of the fastest-growing #digital #banks in the US with more than $80 billion in deposits and $5 billion in loans.

Aggressive pricing, state-of-the-art #technology, reliable customer service and a well-known brand name count among the reasons for the rise. Markus’ success was twice important because - on top of commercial reasons - it exemplified one thing: how traditional financial institutions (Goldman was founded in 1869) can adapt to the #digital age and compete with #fintech players.

Several things have gone wrong:

1) Goldman’s overly aggressive pricing (to gain market share) during the boom years

2) Poor risk #management with more than 25% of card loans going to financially weak customers and a provision rate at subprime levels

3) Expanding defaults as a result of the deteriorating macro environment

4) Bad management decisions such as the one to merge (previously independent) Marcus with the wealth management segment

5) Service quality (i.e. disputes over chargebacks) not being able to keep up with an increasing customer base.

The credit card business is traditionally a hard one to crack, more so for newcomers even if they are called #Goldman_Sachs. And there seems to be no way back for what was once hailed as one the company’s biggest successes. Timing and bad management decisions have proven – once more – an unbeatable combination.

Reawd more, the full article at: 👉

Opinions: my own, Graphic sources: #Goldman Sachs, Roel Wieringa

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🤝 𝐑𝐞𝐢𝐧𝐢𝐬 𝐓𝐔𝐌𝐎𝐕𝐒. @reinis_tumovs

#tumovs #reinis #reinis_tumovs #rtumovs #rtgroup #тумовс #banker #neobanker #тумовс_банкир #tumovs_banker

[gambocco]

With blockchain technology, we can build a transparent and decentralized financial system that restores trust in financial institutions. Together, we can say goodbye to corrupt banks and hello to a more secure and fair financial future. #blockchain #transparency #ethicalbanking

[nbfc-advisory]

UPI, how it changed and will be impacting the Fintech industry in 2023

A report by CLSA verified that UPI corporates to 60% of entire payments — and digital payments have increased from $61bn in 2016 to $300bn in 2021.

Learn More: FinAccountants.com

[poojaverma08]

Cloud Banking - iGCB

Discover the future of banking with iGCB, your gateway to Cloud Banking excellence. Elevate your financial operations with seamless integration, enhanced security, and unparalleled agility, redefining the way banking is done in the digital age.

[peterbordes]

(via Argentine fintech Ualá raises $300M in Series E funding at 2.75B valuation)

“We’re going to use this to scale Argentina, where my goal is to be the largest bank in the country, not just by users but by book,” founder and CEO Pierpaolo Barbieri said in an interview with Bloomberg News. Ualá Eyes Banking Expansion After $2.75 Billion ValuationArgentine fintech company Ualá has raised $300 million from investors at a valuation of $2.75 billion, the latest funding haul for one of the most valuable startups in Latin America. The VC arm of insurance giant Allianz has led a $300 million Series E funding round for Ualá. Stone Ridge Holdings Group, Tencent, Pershing Square Foundation, Ribbit Capital, Goldman Sachs Asset Management, Soros Fund Management, Rodina, SoftBank Latin America Fund, Jefferies, D1 Capital Partners, Claure Group, AlleyCorp and Monashees all joined the round.

[jarvis-invest]

How Digital Banking is Transforming India’s Financial Sector in 2024: Key Innovations, Benefits, and Challenges Driving the Future of Finance – A Comprehensive Analysis

[an-finance]

https://www.india.com/brand-solution/business/how-to-simplify-your-personal-finances-by-streamlining-your-savings-journey/

How To Simplify Your Personal Finances By Streamlining Your Savings Journey

This article aims to serve as a practical guide, indicating some basic steps that you can take towards a simplified personal finance management and better control.

[sharemarketinsider]

Paytm’s UPI User Onboarding Approval: Implications for the Digital Payments Landscape

In a significant development for the fintech sector, Paytm has received the green light from the National Payments Corporation of India (NPCI) to onboard new Unified Payments Interface (UPI) users.

[gambocco]

Tired of being hit with unexpected bank fees for just having an account? It's time to decentralize the banking industry with #blockchain technology & innovative digital banking options. Say goodbye to banks' greed & unfairness and hello to a new era of customer-centric #banking.

[nbfc-advisory]

How will digital banking units (DBUs) transform banking in India?

Read this blog to learn how digital banking units are transforming banking services in India and how you can benefit from this huge change.

Learn More: https://nbfcadvisory.com/how-will-digital-banking-units-dbus-transform-banking-in-india/

[poojaverma08]

Banking Platform - iGCB

 iGCB's Banking Platform redefines the financial landscape with its innovative and versatile solutions. Offering a robust and scalable infrastructure, iGCB empowers banks to deliver a seamless and personalized banking experience to their customers. 

[peterbordes]

The Platinum Prize for Banking Fraud Prevention goes to … Fraud.net for Entity Monitoring! 💰

A huge congratulations to @fraud.net_official and thanks to Juniper Research for this incredible recognition! And a special shoutout to Fraud.net team, whose commitment to delivering an innovative and comprehensive solution helps protect businesses from fraud and risk every day.

Want to learn more about their award-winning platform? Discover how Fraud.net can help you stay ahead of threats with the latest technology by booking a meeting today: https://bit.ly/3YikAjs

[prabhoddavkhare]

Kotak Mahindra Bank’s official mobile banking app for Android phones.

The Kotak Mobile Banking App, a best in class App, provides banking on the go, which is a must in today’s digital era. If you are not an existing Kotak customer, you can open a Kotak Savings account or an 811 digital bank account by visiting your nearest branch.