Uncle Sean's Update - 9/20/24

​Happy Friday!!!
 
Here is the Uncle Sean Update for 9/20/24:
 

• It’s Fed Week!!!  For the first time in 4 years (beginning of the pandemic), the FOMC voted to cut rates by 50 basis points (I admit it – I was expecting 25) bringing the federal funds rate down to 4.75% - 5.00%.  Here is some more detail if you want to dig deeper:
  • Chairman Powell’s Press Conference Transcript (25 pages) and video (approximately 50 minutes)
  • The FOMC Summary of Economic Projections (“Dot Plot” for us more ‘seasoned’ folks – LOL)

 

• 👀 This most certainly caught my attention this week…  The FDIC published a Notice of Proposed Rulemaking (NPR) on recordkeeping requirements for Custodial Accounts (here’s looking at you transactional #FBO) specifically referencing the Synapse bankruptcy, pass-through insurance, and end user confusion.  The NPR specifies (among other things):
  • Standardized electronic file format for custodial account reconciliations to support pass-through insurance (defined end user ownership and amounts)
  • Daily reconciliations of transactional custodial accounts
  • If third-party ledger, the IDI (bank) would be required to have direct, continuous, and unrestricted access to the records of the beneficial owners, including, but not limited to, in the event of the business interruption, insolvency, or bankruptcy of the third party.  A periodic audit / verification of the third party’s records.
  • Annual certification of compliance signed by an executive officer of the IDI.
    • 🤔 It is very interesting to me that this NPR is being issued prior to reaching the end of the comment period of the Joint Agency RFI - Request for Information on Bank-Fintech Arrangements Involving Banking Products and Services Distributed to Consumers and Businesses, which the comment period was extended to 10/30/2024 versus 9/30/2024 just last Friday….

 

• Meanwhile, the ugliness continues in the Evolve Bank & Trust / Synapse saga 💩…  This week Yotta has sued its bank partner, Evolve Bank & Trust, for allegedly stealing and misappropriating customer funds 😮.  The article also provides a direct link to the court document that goes on to cite “theft” and “grotesque misconduct” claiming that Evolve knew about missing funds well before Synapse’s bankruptcy and covered it up.  The court order cites the following Cause of Action against Evolve:
  • Fraud, Conspiracy to Commit Fraud, Negligent Misrepresentation, Negligent Interference with Contract, Negligence, Violation of California’s Unfair Competition Law, and Restitution Based on Quasi-contract / Unjust Enrichment.

 

• Five Star Bank (FDIC 659, Total Assets $6.1B) announced their intent to begin an orderly wind down of its BaaS offerings citing “…evolving regulatory expectations and a proposed rule regarding the re-classification of BaaS deposits as brokered, in addition to the future investments in talent and technology necessary to achieve scale…”
  • The bank is preliminarily targeting completion of the wind down of its BaaS business sometime in 2025.  As of June 30, 2024 their BaaS operations totaled about $108 million of deposits, representing about 2% of total deposits, and $31 million of loans, representing less than 1% of total loans for the bank.

 

• 💥 CSI continues to strengthen their core offerings by announcing their acquisition of Velocity Solutions.  This follows CSI’s acquisition of Hawthorne River loan origination platform back in December 2023. 
  • And they may not be done with their acquisitive hunt as David Culbertson, President and CEO of CSI, states in the PR, “We’re eager to identify more opportunities to evolve the differentiated financial software and technology solutions that make CSI the first choice for community and regional financial institutions nationwide.”

 

• Walmart is beefing up their pay-by-bank offering next year to real-time processing by partnering with Fiserv NOW network that is connected with TCH RTP and FedNow.

 

• DailyPay (EWA platform) has launched Credit Health, a free financial wellness tool integrated within the DailyPay app to help users stay informed about their credit status and financial position.
  • Personally, I am very happy to see this as I have long felt that some form of credit counseling / financial education aspect needs to be tied to EWA offerings.  Nice job DailyPay!!! 😊

 

• 💪 Congratulations to the ZSuite Team with their milestone announcement of achieving 100 bank partners across 28 states!!!! 🎉🤠

 

• High-five to Finli as they announce successful completion of SOC 2 Type II audit.  Great work!!! 🤘

 

• Brex announced the launch of Brex Embedded, an API-driven payments solution for B2B software vendors to embed Brex virtual cards.

 

• Oracle (specifically the Oracle Financial Services division) announced the launch of Oracle Financial Crime and Compliance (FCCM) Management Monitor Cloud Service to help banks, FinTechs, and other financial services companies to “gain a holistic, centralized view of their FCCM efforts, enabling them to identify potential issues faster and, proactively manage risk to thwart criminal activity and reduce compliance costs.”

 

• Equifax partners with Prism Data for consumer cash flow underwriting via Prism’s CashScore® platform.  Strategically positioning Equifax to take advantage of the upcoming 1033 Open Banking rule.

 

• Old Second National Bank (FDIC 3603; Total Assets $5.7B) selects Newgen Software's digital account opening solution to simplify online onboarding of both retail and business customers.

 

• Meow (business-focused neobank) launches Meow Financing powered by Lendio’s Embedded Lending solution for small business working capital solutions.

 

• Lumin Digital keeps making headlines (they are on a roll 🚀) – this week, Consumers Credit Union (Charter 68588; Total Assets $3.5B) selects Lumin Digital for new digital banking solution.

 

• Finastra announced an integration with Prelim allowing for more streamlined digital account opening for retail and commercial accounts for FI’s on the Finastra Phoenix core solution.

 

• Rumor mill…. 🤷‍♂️
  • Many grumblings this week that JPMorgan may be in advanced talks with Apple to take over the credit card issuance from Goldman Sachs.
  • Bloomberg (citing unnamed sources) reported that Vista Equity Partners may be looking to spin off and sell Finastra’s Treasury and Capital Markets (TCM) unit for upwards of $2B.

 

• Notable FinTech funding for the week:
  • ClassBank (edtech company integrating real-world financial skills into K-12 classrooms nationwide) raised $1M in Pre-Seed and grant funding.  Very cool concept; and everyone knows that Uncle Sean loves K-12 financial literacy programs ❤️ – check them out at classbank.com.
  • Wealth.com (end-to-end estate planning platform built specifically for FI’s) raised $30M in Series A funding round.
  • AtoB (payment solutions for transportation industry) raised $130M in Capital consisting of a combined Series C and debt funding.

 
 
Random Uncle Sean stuff:

• I have to admit I am a little freaked out that we are almost kicking off 4Q2024…  And to compound that, we are only 96 days away from Christmas!!! 🎄🎅 It just feels weird saying that while we still have 98+ degree temps here in Texas! 🥵
• You can stop scrolling now 😊 - here are the Dad / Bad Jokes for the week:
  • Happy to report that my house doesn’t have any unhealthy snacks in it…  Because I ate them all is of no consequence (mind ya own business!)… 🤠
  • I just melted an ice cube with my mind by staring at it…  It took a lot longer than I thought…
  • Eyelashes are supposed to prevent things from going into your eyes, but whenever I have something in my eye it’s almost always an eyelash…  It’s eyeronic.. 🙄
  • Feeling a crunch in a non-crunchy food is one of the single most terrifying experiences a human can face while eating! 😧🤢

 
 
Have a GREAT weekend, go outside and play, 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.