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Bulletin

Uncle Sean's Update - 5/27/22

5/27/2022

 
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​Happy Friday!!!
 
Wishing everyone a very Happy Memorial Day!  Trying to keep this one short and quick as we are cooking up some hamburgers and homemade onion rings this afternoon (don’t tell my boss I’m playing hooky - LOL)!  Here is the Uncle Sean Update for 5/27/22:
 
  • Very excited to share that Webster Bank has joined the BHB Banking-as-a-Service (BaaS) Association as a founding member!!!  Great things continue to pour out of the Bankers Helping Bankers (BHB) platform every week!
 
  • Stipe expands their middleware / open API functionality by launching Stripe App Marketplace - “now in beta testing (and is free), is launching with more than 50 apps from leading providers like DocuSign, Dropbox, Intercom, Mailchimp, Ramp and Xero.  The apps span everything from accounting, analytics, CRM, eSignature to marketing” with more being added over time.
 
  • M1 has selected Thought Machine's Vault Core product with real-time ledger to power M1’s banking products and accounts. 
    • I’m interested to see how this plays into M1’s overall strategy with First National Bank of Buhl as the potential / eventual sponsor bank (reference - So... I bought a bank by Brian Barnes, CEO and Founder of M1).
 
  • Synapse launched Global Cash - a BaaS service enabling FinTech companies abroad to quickly and easily implement a U.S. banking solution in over 35 countries consisting of “debit cards, bank-to-bank transfers, virtual account numbers for direct debit and direct credit, bill-pay, ATM access, and domestic and international transfers.”
    • Early customers include Nomad and Utoppia.  Worth noting that Synapse primary sponsor bank is Evolve Bank & Trust.
 
  • Bank of America announced they are raising their US minimum wage to $22 per hour by the end of June as part of their existing commitment made last year to pay at least $25 per hour by 2025.
 
  • Acting Comptroller of the OCC, Michael Hsu, gave some straight forward and rather harsh comments this week during his speech at the DC Blockchain Summit 2022 titled, “Crypto: A Call to Reset and Recalibrate.”  Not completely surprising as he has been a vocal crypto skeptic.  Here are a few key points from his speech providing a regulator’s perspective:
    • The crypto economy is dependent upon “hype” and unsustainably high yields – leading to bubbles.  Hsu went on to add, “There seems to be growing acknowledgement that yield farming today may have more in common with Ponzi schemes than with productive innovation.”  OUCH!!!  😲
    • The “crypto ecosystem is “highly fragmented and prone to hacks” with new blockchains being added daily (and the vulnerability of cross-chain bridges required for interoperability).
    • “Contagion risks are real” as was evident in the recent collapse of TerraUSD spreading contagion to the largest stablecoin, Tether, and to the broader crypto ecosystem.
    • “Custody and ownership rights are still underdeveloped” citing Coinbase’s recent regulatory filing stating that in a bankruptcy event, its users would be at risk of becoming unsecured creditors.
      • Still chuckling a little from the “Ponzi scheme” reference, Uncle Sean can’t help but wonder – do you think he’ll be invited back to speak at the DC Blockchain Summit again next year???  LOL!!!!
 
  • Meanwhile, per the Federal Reserve request for comment, multiple industry associations weigh in opposing a U.S. Central Bank Digital Currency (CBDC).
    • ICBA opposes CBDC
    • ABA says No Compelling Case for US CBDC Today
    • CUNA and NAFCU also express their reservations
    • And don’t get in a hurry even if congress does act to pass legislation to issue a CBDC…  Federal Reserve Vice Chair Lael Brainard stated that a Fed issued CBDC “could take five years to put in place the requisite security features…”
 
  • The FDIC released March 2022 Quarterly Banking Profile report.  Key points include:
    • Net Income declined YoY – mostly due to large credit reserve releases last year and current increases in noninterest expense (G&A).  Allowance for Credit Losses as a percentage of total loans and leases is down 44 bps from last year to 1.54%, but the big banks are starting to increase reserves again amongst macroeconomic concerns.
    • Net Interest Margin (NIM) remained flat despite an increase in Net Interest Income due to loan growth of 4.9% over last year (the increase in average earning assets offset the rise in rate spread).
    • Credit Card receivables are up 11.8% YoY.
    • Only 40 banks on the “Problem Bank List” which is down from 44 last quarter.  This is the lowest number of problem banks since QBP data collection began in 1984.
 
  • Klarna (BNPL) plans to lay off about 10% of their employees.  This news comes after The Wall Street Journal (paywall blocked – sorry) reported that Klarna was seeking to raise up to $1B in a down round lowering their valuation from $46B last year to approximately $30B.
    • Also announced last week - Klarna hits 150M users and 400,000 merchants.  If this is a game of scale, Uncle Sean is curious - just exactly how many customers do you need to become profitable???
 
  • Bolt (online checkout OS) also just laid off 1/3rd of their workforce.
 
  • Notable FinTech funding for the week:
    • Andreesen Horowitz closed on their latest crypto fund (as expected) and it’s a doozy!  The new $4.5B Fund is their fourth and largest such fund for crypto and blockchain investments bringing the total raised in the asset class to $7.6B.
    • equipifi (white label BNPL solution for banks and CUs) raised $12M in Series A funding round.
    • Belong (RE proptech platform) $80M in Capital consisting of $50M equity funding and $30M debt.
    • Caribou (automobile lending and insurance solution) raised $115M in Series C funding round at a $1.1B valuation
    • Stable (commodity hedging platform with a focus on agri-food) raised $60M in Series B round.
 
 
Random Uncle Sean Stuff:
  • Don’t forget that the reason for our Memorial Day holiday is to remember and honor our veterans that paid the ultimate price.  So please spend extra time with family, friends, and loved ones this holiday weekend as we are continually reminded that life can be fleeting – live, love, smile, and laugh often!!!!  😊
  • Aunt Patty and I are headed over to Tanner’s this weekend to enjoy some much needed family time and Memorial Day shenanigans - woohoo!!!!
 
 
Have a GREAT Memorial 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 smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #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.
 
 

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