Uncle Sean's Update - 5/10/24

Happy Friday!!!
 
Happy Mother’s Day to all the Moms everywhere (in my best Vanilla Ice impersonation – “Word to your Mother” 😎)!!!!! ❤️💕  Here is the Uncle Sean Update for 5/10/24:
 

• 👀 Just ICYMI…  The Federal Reserve, FDIC, and OCC issued a guide to assist community banks to develop and implement third-party risk management practices.  Anytime you see joint agency guidance, you should definitely dig in!  This guide is of critical importance for banks involved in BaaS / embedded finance.  A few key observations:
  • There is a lot of emphasis on AML/CFT, OFAC, complaint management, due diligence (including ongoing change management), contracts, and termination.
    • Particular emphasis on the bank’s board of directors and management understanding the risk and complexity of third-party relationships (education and competency).  This has been a focus area of many recent enforcement actions (follow Sarah Beth Felix for all things AML).

 

• Oof…  Speaking of third-party risk management (TPRM)…  EVERYBODY, shout it with me cheerleader style 📣, “T-P-R-M for the win! Again, again, and again!” - LOL…  This week brought some new developments in the current drama-saga with Synapse, et al…  It’s the gift that keeps on giving…  Credit Jason Mikula for again breaking this story early:
  • TabaPay has terminated its planned acquisition of Synapse which is currently in bankruptcy proceedings.😬 
    • This subsequent article by PYMNTS is a good summary of the finger-pointing surrounding the Synapse middleware and termination issues with Mercury and Evolve Bank & Trust.
    • Synapse founder and CEO Sankaet Pathak penned a public post on Medium accusing Mercury of moving more than approximately $50M in funds out of the Synapse Program GL than they should have stating, “Our hope with open sourcing this information is that there will be a public outcry (at least from our customers) that will motivate Evolve and/or Mercury to swiftly resolve this issue instead of hoping that this problem would go away.” 
      • Wow….  No wonder TabaPay doesn’t want any part of this drama.  And we have to wonder why bank regulators are pressing enforcement actions specifically in the TPRM and BaaS vertical (Uncle Sean sarcasm)?
    • Additionally, Jason Mikula post on X regarding Synapse bankruptcy hearing:
      • “Lineage attorney (paraphrasing): we have $60-80 million in end user funds, and we don't have records to return these to who they belong to, Synapse does.  Judge describes as potential ‘hot mess’.”

 

• Meanwhile, FIS announced the launch of Atelio™ by FIS, “an innovative fintech platform that provides the building blocks for financial institutions, businesses and software developers to embed financial services into their offerings.”  Recall last year in June 2023 when FIS acquired Bond (a BaaS middleware platform).
  • Just thinking out loud here from a Core Processor / embedded finance standpoint…  Now we have FIS Atelio, Fiserv Finxact, DCI direct-to-core and sidecar model, CSI direct-to-core, and Q2 (depending on how you define fintech / embedded finance).
    • So I wonder what’s cooking over at Jack??? 🤔

 

• Unit21 adds ACH Risk Scores and Action Event Rules to enable financial institutions to “combat faster payment fraud and improve customer experience by unlocking near-instant funds for legitimate customers.”

 

• ZSuite Tech continues to do good across the US. 💪🚀 This week, Community Bank N.A. (FDIC 6989; Total Assets $15.6B) partners with ZSuite Tech to introduce ZEscrow to facilitate complex escrow and subaccount management for the banks customers – specifically targeting law firms, property management, healthcare companies, municipalities, utilities, and funeral homes.  Nice!!!! 😊

 

• Block has been testing BNPL by integrating Afterpay with Block's Cash App debit card.

 

• No shortage of regulatory issues this week:
  • The CFPB issued a consent order against Chime ordering them to pay $4.5M to resolve allegations that it failed to timely refund customers after their accounts were closed.
  • Robinhood receives Wells Notice from the SEC staff regarding certain cryptocurrencies being viewed as securities.
  • Upstart was subpoenaed by the SEC regarding the fintech’s disclosures related to use of its artificial intelligence models and loans.

 

• Florida signs law that designates Credit Unions as public depositories – meaning CU’s can accept deposits of public funds from state and municipal entities.

 

• Following the completed merger of PSCU and Co-op Solutions, the combined CUSO entity has now rebranded as Velera.

 

• Personnel moves:
  • R&T Deposit Solutions announced the appointment of Mieko Shibata as Executive Vice President and Chief Information Officer.
  • Rocket Companies hired Shawn Malhotra as its first ever group Chief Technology Officer.
  • Remitly appoints Ronit Peled as Chief People Officer.

 

• Notable FinTech funding for the week:
  • Panax (AI-powered cash flow management platform) raised $15M in capital.
  • Monzo raised $190M in capital at a $5.2B valuation to fuel international expansion, particularly in the US.
  • Outpave (embedded finance / spend management for trade businesses) raised $1.2M in Seed Funding to modernize financial operations for small to mid-sized trade and construction businesses.
    • This is a really cool solution – check them out at outpave.com.

 
 
Random Uncle Sean stuff:

• Shout out to all the Moms for all you do!!!  For us, I am certain that Aunt Patty is going to request her standard celebratory meal which is grilled steak (and probably a few shrimp for good measure), loaded baked potatoes, and Caesar salad.  Undoubtedly served with a few adult beverages (😊 🍷) while hanging out on our back porch with family and enjoying the day.  Yep – sounds good to me too!!!
• Yessir, you made it – you can stop scrolling now.  Here are the Dad / Bad / Mother’s Day jokes for the week: 😊
  • Mom. Mom. Mom! Mom. Mom. Mom. Now that I have your attention…Happy Mother’s Day!
  • Be sure to tell your Mom that WTF stands for “Wow, That’s Fantastic” and her texts will be so much more entertaining!!! 😯🤠
  • All Moms everywhere (especially Moms of boys)…  “Being abducted by aliens might just be the vacation I need at this point!”  
  • And last, but certainly not least….  My alarm went off and I said, “well, I guess it’s time to take my stupid pills.”  Aunt Patty quickly replied, “you can quit taking them, they worked!” 🤣🙃🤪

 
 
Have a GREAT Mother’s Day 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.