Uncle Sean's Update - Jan 8th 2021
Happy Friday and welcome to the Uncle Sean Update for WK 2 of 2021!!!!
SoFi goes public via SPAC merger with Social Capital Hedosophia Holdings V (NYSE:IPOE).
The deal values SoFi at a whopping $8.65B. (CNBC)
In case you are wondering what the heck a SPAC is (don’t worry – if you don’t know what it is, that just means your normal), here is a good definition from Investopedia -
FinTech IPO Pipeline
For 2021 should be exciting – scratch SoFi off the list now, but we are still looking forward to Affirm, Coinbase, Robinhood, Marqeta, AvidXchange, Stripe (maybe), and even Instacart.
Okay – I admit that Instacart may be a stretch to include as a FinTech…. But all they have to do is issue a Business Debit Card to pay their contractors and they could even offer EWA as an added benefit… Stride Bank, are you listening????
Stride Bank is the sponsor behind Chime, Lyft, One VIP, and most recently DoorDash DasherDirect program.
Customers Bank completes the sale of BankMobile to Megalith. (Link)
In connection with the closing of the Merger, Megalith changed its name to “BM Technologies, Inc.” (“BMT”) and is now trading under the symbol BMTX as of January 6, 2021 (NYSE: BMTX).
BBVA is shutting down Simple and Azlo as part of the acquisition by PNC. (NerdWallet)
Personally, I am not shocked by the closing of Simple. BBVA took a lot of write-downs on that business over the years. But I was a little surprised by Azlo as this unit was growing. I guess this clarifies PNC’s position of remaining a BaaS sponsor bank through partnerships, but not wanting to own a fintech or direct bank (i.e. digital branch).
Recall the PNC earnings transcript from 3Q2020.
Bill Carcache -- Wolfe Research – Analyst – “…If I may squeeze in one last one. Bill, can you share your thoughts around the direct neo-banks, sort of the Chimes and others out there that operate exclusively online without traditional branch networks and, in this sort of post-COVID environment, how you see their presence impacting the competitive environment over, say, the next three to five years? And is there any potential benefit to deploying some of the BlackRock proceeds on a neo-bank? Or are those sort of capabilities things that you think you can build on your own?”
Bill Demchak -- Chairman, President, and Chief Executive Officer – “I'm trying to contain myself. I wish we had the opportunity to basically not have to make any money and grow customers by giving stuff away and running our back office on a third-party bank system that's written in COBOL from 50 years ago. But we don't have that luxury, yes. The tech capability of these guys, there's nothing that they have that we don't have, nothing that they have that we can't produce if we wanted to have.”
PPP Round 2 to open up on Monday, January 11.
The first two days are restricted to first time borrowers; and only financial institutions with less than $1B in total assets will have exclusive access to the portal. (SBA Link)
OCC announced that Nationally chartered banks can use stablecoins and blockchains to facilitate payments and other activities
Specifically, “a national bank or federal savings association may validate, store, and record payments transactions" by serving as a node on an independent node verification network (INVN). BankingDive has a good write-up on this.
The OCC News Release can be found here (this includes a link to the 10 page interpretive letter)
CFPB wants to issue and regulate FinTech charter (Link)
A task force created by the Consumer Financial Protection Bureau is recommending that Congress consider authorizing the bureau, and not the Office of the Comptroller of the Currency, to issue federal charters to fintech companies engaged in lending, payments or remittances. "There is an opportunity for the CFPB to be an even more powerful force to promote consumer protection and welfare, to be a chartering entity for fintechs," says Todd Zywicki, chair of a CFPB-appointed task force on consumer regulatory reform. -
Of course the OCC was quick to respond saying they should be the one to issue and regulate the FinTech charter -
Hmm, just a few weeks ago we discussed the CSBS suing the OCC over the same issue – “CSBS asserts that the OCC is overstepping their bounds”
In the old days, we called this irony….. HaHaHa!!!
Just in case you are having trouble falling asleep, here is the CFPB press release that includes links to the Taskforce Report (2 volumes totaling 898 pages) -
CO Federal Credit Union placed into conservatorship (not a failure) by NCUA
Warning – what comes next is a shameless plug for our FedFis FI Analysis Team because, well…. they are awesome!!!) In case this comes up in any of your discussions with regulators, customers, or prospects, our FedFis Rating© for C O FCU was 4.15 and 4.21 in 3Q20 and 2Q20 respectively placing them in the bottom 4% of all credit unions each quarter. This is the first conservatorship of 2021; and the latest by the NCUA since Southern Pine (6/11/20) which is still in conservatorship.
Random Uncle Sean Stuff:
We made it to 2021 – and the hits just keep on coming…. Keep an eye out for flying monkeys as I am certain that should be any day now– LOL!!!!
I finally got my winter/early spring garden completed last weekend. 75 onion sets, 15 spinach transplants, and my carrots and radishes are doing great. HOWEVER, my damn cat thinks it is funny to dig the onions up every few days; and apparently he likes to eat the spinach leaves too (I’ve caught him in the act several times)…. Beginning to think he is just pure evil!
They are calling for 50% chance of snow here in Austin late Sunday night and I am 100% stoked about it!!!
By the way, if you are working remotely, can you still get a snow day off (asking for a friend)???
Have a GREAT weekend and stay safe!!!
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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