Uncle Sean's Update - 12/8/23

Happy Friday!!!
 
Happy Hanukkah to all who celebrate! 🕎  The message of “finding light in times of darkness” hits a little different this year… 🙏🏻  Here is the Uncle Sean Update for 12/8/23:
 

• With all eyes on the Fed next week for the FOMC meeting… The November Jobs Report showed a strong but slightly moderating picture coming in at +199,000 (+190,000 expected, +150,000 previously) while the unemployment rate dropped to 3.7% (3.9% expected, 3.9% previously) due in large part to government hiring and the end of labor strikes.

 

• J.Crew (retail clothing brand) is moving their credit card program from Bread (Alliance Data / Comenity) to a new card platform with Synchrony Financial.
  • This caught my attention as I am starting to see more and more old-school “store cards” making the shift away from private label, closed-loop solutions to more modern co-branded, open-loop platforms with customized rewards specific to the retail brand.  Tanner Mayo is fond of saying co-branded CC for retail brands is the gateway drug (LOL) to BaaS and broader embedded finance; and I think he may be on to something here!!!

 

• Speaking of Retail Brands and Cards….  Brim Financial (Credit-Card-as-a-Service) announced a strategic partnership with Mastercard embedding Mastercard’s open banking capabilities across Brim’s end-to-end platform.  Designed to provide “turnkey solutions for all types of companies looking to launch and run commercial and consumer credit cards” including FI’s, FinTech companies, and Retail Brands.

 

• Just in time for the Holidays 🎁 (yes, that’s a bit of Uncle Sean sarcasm)…  The OCC issued Guidance on ‘Buy Now, Pay Later’ Lending…  Some key points:
  • Clear and conspicuous disclosures (late fees, etc.) including transparency in repayment terms.
  • Adequate credit risk management, charge-off practices, and allowances for credit losses; including safeguards that minimize adverse customer outcomes.
  • Whether in-house or via a third party, banks are required to operate in a safe and sound manner and in compliance with applicable laws and regulations (yep - there’s that “third-party” language again…).

 

• But wait there’s more (it is the season of giving after all - LOL 😊)….  The OCC released their Semiannual Risk Perspective for Fall 2023 – not a bad read at only 37 pages and laid out well.  Definitely worth reading with some VERY good graphs.  Some notable items:
  • Cyber threats and Operational risk related to digitization and innovative products (specifically mentions fraud and errors related to P2P and instant payments).
  • Liquidity contraction and Rates related to deposit competition, wholesale funding, and impacts on securities portfolios.
  • Credit Risk particularly with CRE and the impact of prolonged inflation / rates on corporate profitability and the health of the consumer.
  • And the big one, Compliance Risk specifically mentioning innovative technologies, expanded partnerships with third parties (there it is), such as financial technology firms, and increases in Bank Secrecy Act/Anti-Money Laundering risk (winner, winner, chicken dinner - LOL).

 

• Not unexpected, but worth noting…  Reuters is reporting that bank regulators are taking a tougher, more proactive approach and in some cases, conducting surprise off-cycle reviews with emphasis on liquidity and interest rate management (not overly shocking considering the rough post mortem reviews of the large bank failures earlier this year).

 

• Treasury Prime announced a strategic partnership with Effectiv to help banks and fintech customers on Treasury Prime’s network to manage fraud by using “Effectiv’s Transaction Monitoring solution to detect fraudulent behaviors, reducing the risk of financial loss and reputational damage.”

 

• Bluevine announced that their small business digital banking platform has surpassed $1 billion in managed deposits with over 500,000 SMB’s.  Nice work!!!! 😊

 

• Self Financial announced free rent reporting to all three credit bureaus to help expand credit access to under-served consumers.  Uncle Sean is always a fan of ways to build credit (especially for free) without having to incur debt.

 

• Cross River (FDIC 58410 and leading BaaS sponsor bank) announced a $150M Credit Facility to Best Egg to continue to grow the Best Egg Flexible Rent program.

 

• Coming to America….  Banked (UK FinTech) to offer its pay-by-bank services in the U.S. next year in 2024.

 

• Q2 (NYSE: QTWO) and Array continue to expand their existing partnership where Q2 will resell Array’s financial wellness solution – My Credit Manager – directly to banks and credit unions.

 

• Grow Credit announce a partnership with Dovly (credit building and monitoring app) that offers Dovly customers an additional credit builder solution by “making their monthly Dovly payments on time with Pay-with-Grow."

 

• Looks like Amazon is dropping Venmo as a payment option for Amazon purchases effective 1/10/24….  Not exactly sure how many folks were actually making Amazon purchases using their non-FDIC insured Venmo account balance anyway…  🤷🏻‍♂️

 

• A few interesting personnel moves:
  • Congrats to Troy Bradley as the new CTO at Computer Services, Inc. (CSI) to spearhead product innovation for community banks nationwide!
  • PayPal (NASDAQ: PYPL) names Suzan Kereere as President of Global Markets, formerly of Fiserv where she led Global Business Solutions, the company's merchant-focused offerings.
  • Fiserv (NYSE: FI) announced a couple of high profile executive leadership changes, including:
    • Jennifer (Jenn) LaClair, will move from her CRO role to lead Global Business Solutions to succeed Suzan Kereere.
    • Rick Singh will join Fiserv as Enterprise Growth Officer in mid-January 2024 to lead strategy and M&A.

 

• Notable FinTech funding for the week:
  • Spade (API based real-time merchant intelligence for the card ecosystem) raised $10M in Series A funding round to help with fraud, disputes, and chargebacks for card issuers.  “For banks and fintechs that use Spade, each transaction prompts an instant return of enriched merchant intelligence, providing issuers with granular details across true merchant name, category, and geolocation.”  Check them out at spade.com
  • Center (card-first business spend management platform) raised $30M in Series C round citing “+64% customer growth year-over-year.”

 
 
Random Uncle Sean stuff:

• Congratulations are certainly in order as It’s set - the college football playoff bracket for the top 4 teams are: No. 1 Michigan vs. No. 4 Alabama; and No. 2 Washington vs. No. 3 Texas…  To say Florida State is a little peeved as a 13-0 undefeated power 5 conference champion is a bit of an understatement! 😲
  • Here is the entire college football bowl game schedule including dates, times, and TV channel.
• And more football 🏈 – I am looking forward to the NFL rematch of the Philadelphia Eagles vs Dallas Cowboys this Sunday in Dallas this time…  Go Cowboys!!!  I love this time of year!!!!  😊
• Some good old-fashioned dorky Uncle Sean knee-slappers to kick off the weekend:
  • Alcohol and calculus don’t mix – never drink and derive… 🤓
  • Do people in electric vehicles listen to AC/DC, or something current….???  LOL!!! ⚡
  • If tomatoes are fruit; and oranges are fruit - does that mean that Bloody Mary’s and Mimosa’s are technically smoothies (asking for a friend)??? 😂🥂🍾
  • Two silkworms had a race.  They ended up in a tie….  (eyes rolling) 😜

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at [email protected] | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | [email protected] #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.