Anurag Mathur

The widening fallout from Synapse’s collapse and subsequent bankruptcy—and every bank and fintech partner swept up in it—continues to raise serious operational questions, cause lingering angst for customers still unable to access their money, and yet is utterly devoid of soul searching on the part of executives responsible for what transpired. Synapse, a Banking-as-a-Service (BaaS) provider backed by prominent venture capitalists, worked with as many as 100 bank and fintech partners—including Evolve Bank & Trust, Lineage Bank, Mercury, Dave, Yotta, Juno and Yieldstreet—serving as the intermediary between bank partners providing deposit accounts, loans and payment products and the fintechs that embed them into their customer apps. As the enormity of U.S. bankruptcy trustee Jelena McWilliams’ findings became public, what was also glaringly obvious: Some of the companies involved were so busy pointing fingers at each other that they failed to acknowledge that customers—all of whom were unwittingly tied to Synapse and its bank partners through their usage of fintech apps—have become collateral damage. That must change. Given the pace of financial innovation and the size of most BaaS banks—60% of BaaS banks have assets under $5 billion, while about 30% have assets under $1 billion, according to CCG Catalyst —the principles-based interagency guidance from the Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency seems inadequate to prevent another Synapse-like event. The resolution of the Synapse bankruptcy will likely be precedent-setting, potentially dictating changes to the BaaS model to ensure greater stability and reliability, sharpening enforcement of existing bank regulations and forcing new and deeper straight-line federal regulatory oversight—perhaps via national charters—of BaaS providers and fintechs. My latest for FIN: The Fast Forward on Fintech.

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If you’re interested in understanding the very broad views of stakeholders in the bank-fintech ecosystem and where this may all be headed, I recommend reading a sampling of RFI responses from bank, nonbank, everyday Americans, and other interest groups. A close reading of these responses reveals, among other things: — Possible paths for the future of these partnerships, including the role of the Bank Service Company Act — The need for shared terms/common nomenclature — The need for additional nuance in how we risk rate these partnerships — The fact that these partnerships are not all “as a service” — they also include fintechs providing financial services to banks as the primary provider — The importance of these partnerships to the survival of community banks and millions of consumers and businesses — Differences in views between banks and nonbanks regarding what types of partnerships should be considered “high risk” — Differences in views (including across banks) about the role of future regulation and examination of fintechs —The critical importance of delineating roles and responsibilities, risk of loss, etc. at the contract level, understanding these very important details always, and also risk managing the program in continuous alignment with the bank partner’s own risk tolerance —The importance of re-examining the constraints of CSI, and coming up with ways to foster better, more comprehensive communication between banks and third parties —The various very personal stories of consumer harm (including thoughtful comments on the FDIC’s recordkeeping proposal), which should animate all of us to continue innovating and making this environment safer and better. DM if you’d like specific recommendations or further color.

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Big news came recently that Moov has partnered with Jack Henry to embed Visa Direct and Mastercard Send to enable push-and-pull to debit for their core banking customers. I will be onstage today with Ben Metz CTO at Jack Henry Connect to share more and what we are doing tp help SMB's! This launch is solving one of the biggest pain points for smaller banks and credit unions competing with big banks - speed of funds movement. Bank customers on a Jack Henry core can now link external debit cards for instant money movement in and out of accounts over the card networks. Moreover, we've added tools like Account Name Inquiry and Address Verification to decrease fraud, a critical concern for banks adding instant payment functionality. Some real examples: ◼️ My HELOC payment is due. Move money from my external account the same day. ◼️ My big bank frustrated me with a fee, open and fund my new small bank account same day. ◼️ I need to send my vendor money for supplies. Push to her debit card instantly. ◼️ My credit card's auto pay went through today, pull money from my external account instantly. Yes, customers can use Zelle or Remote Deposit capture to transfer funds. But, every bank offers a debit card, allowing ubiquity in real-time money movement through the existing account transfer user interface. This is a game changer because it helps those banks achieve parity with the money centers and surpass the user experience of most regional institutions. If you are at Jack Henry Connect, introduce yourself at the welcome reception! #JHConnect Press Release Here:

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As more financial institutions develop their own coupon platforms, banks face a challenge in maintaining their acquisition-driven growth strategy in core business'. While focusing resources on scaling weaker areas of their websites may seem promising in the short-term, it can erode their competitive advantage in core businesses, weakening Retail Banking and Credit products. Financial Services should continue to focus on their core business's inside of digital. Expanding into new products that drive supplementary growth with supplementary resources. #banking #financialservices #digital #acquistions #Digitalmarketing #SEM #SEO

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Last week, Fidelity announced two “tech bundles” aimed at RIAs under $250M. Such bundles may look attractive on their face, but they tend to fall apart under scrutiny. Why? First, bundles add complexity that smaller firms may not be staffed to address. Generally speaking, for firms with under $250M in AUM, a simpler tech stack is often more effective. Second, bundling complicates the service model. There’s no single point of contact, no internal resource RIAs can go to when things go wrong. Troubleshooting and playing “dot connector” takes time and attention away from clients. Finally, it’s never clear how long services and tools will be bundled together. An RIA might come to depend on the set of tools in a bundle, only to find it will be discontinued in six months. Shifts like this can be seismic for small firms. Growing RIAs deserve an integrated platform with long-lasting features built specifically for them. In other words, bundles tend to fall short because the whole is usually less than the sum of its parts. A few things I noticed from the RIABiz article worth calling out: The price of Fidelity’s bundles differs from firm to firm. Usually, this means that firms with higher AUM enjoy steeper discounts, better pricing, and most unfortunately, a higher level of service. This is wrong. Advisors of all sizes deserve both the best pricing AND exceptional service. FMAX Essentials initially offers only 25% of the investment options of the full FMAX offering. That means fewer options for RIAs, and less personalization for clients. The result? Advisors will be pigeonholed into making tradeoffs. This line: “One advisor said it would be great if there were an ‘easy button,’ if someone can show us what we need to run our businesses day-to-day.” There is an easy button. It’s Altruist. With some of the lowest trading fees in the industry, $0 technology costs for Altruist brokerage accounts—which gets you all the tools you need to open, fund, trade, bill, and report—and an expertly staffed service team available by chat, phone, and email, it doesn’t get any easier than that.

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What I really appreciate about Fidelity Private Shares is their constant support throughout every step of our fundraising journey. They're always there for us! In this article, I must say, I'm familiar with about 90% of the content and strive to be intentional in managing our investor pipeline. However, having a reliable resource like this to double-check our approach is not only straightforward but also extremely helpful! #vc #investors #angels #womeninSTEM Darshana Inc.

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Finally... the first CryptoMondays #Boston in tomorrow (Nov. 18th)!! It's our 58th city. Hope you can make it Kirill Bensonoff, Matt Johnson, Alex Felix Kyle Pitman, Ray W., Thomas Dunleavy, CFA, CAIA, Robert A. Henderson, Kathleen Chase, James Leroux, Tim Rice, Adam Oliveri , Ken Gawrelski, David Levy, Jahon Jamali, Richard Man, Dror Avieli, Benjamin Friedman, Heidi Pickett, Barbara Russell, Yaro Pan, Sal Ternullo, Keli Callaghan, Avi Meyers, Steven Bakalar, Kent Lin, Andrew Pojani, Mike N., Matt Bridges, Craig Prager, Larry Silverstein, Andy Singleton, Jim Myers, Dave Balter, Matthew Walsh, David Shack, Hadley Stern, Brian Mariscal, Bruce Johnston, Michael Kumin, Wyatt Khosrowshahi #crypto #bitcoin #ethereum #cryptocurrency #blockchain https://bit.ly/CMBSTN1118

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Even though private investment in fintech has declined, there's still $100 billion in aggregate deal value. Macroeconomic conditions have impacted deal sizes, causing them to trend downward. If interest rates improve, we could see better M&A activity, but until that happens, there will be some level of uncertainty. #Fintech #MA #Economy #PrivateInvestment #Deals

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According to Liminal's 2024 Link Index for Account Takeover Prevention in Banking, mobile apps are a primary target for ATO attacks. Yet, most FIs still use outdated SMS one-time PIN codes (OTPs) to secure mobile logins and transactions. 🔐 📝 In our latest blog, Entersekt Product Marketing Manager, Janike Stiglingh, explains the fraud prevention benefits of authentication that uses risk signals for added security, without added friction. Solve ATO at your FI! Learn how 👇 https://gag.gl/2xuKhZ

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The much anticipated Dodd-Frank 1033 rule was announced by the CFPB today. This marks a critical step in securing strong data rights for consumers in financial services. Plaid was founded on the belief that consumers should have a right to access and share their financial data in order to get the financial products that work for them, and we are proud to have played a small role in creating a thriving, competitive and dynamic digital financial system – one that holds so much promise for consumers as the industry becomes fully digitized. What does this mean for you? If you’re building products that leverage open banking, we’ve created a useful 1033 readiness checklist for you (https://lnkd.in/extB6r94) that we will continue to update. If you have customers that link accounts with other apps and services, we’ve created a suite of open finance solutions (https://lnkd.in/gUyX8by8) that help you better prepare. We’re excited to be part of this new era of open finance and to support our customers, partners, and consumers in this regulatory shift. Stay tuned for more insights and updates. Read more about what this new regulation means and next steps here: https://lnkd.in/gbcPvUMH

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The digital wallets ID.me deploys today were originally developed out of NIST grant funding awarded under the Obama-Biden administration’s National Strategy for Trusted Identities in Cyberspace (NSTIC). To receive that funding, we had to demonstrate that we are: - Secure and resilient - Interoperable - Cost effective - Privacy Enhancing Below, Daniel Julian outlines how ID.me enhances privacy and puts consumers in control of their data.

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Fractionalizing treasury bills is here. Another partner launch! This lets broader consumer markets save for short-term goals in lieu of only holding cash. Using NerdWallet? Check out the new feature! 👏 👏 👏 ~~~ "The challenge that Nerdwallet and Atomic set out to solve is how can we make treasury bills behave and feel like cash. When you think about treasury bills today, they’re much less flexible than cash in the sense that you have to buy them in the secondary market, and in increments of $1000. We built technology to fractionalize ownership of treasury bills so you could actually purchase in increments of one cent. Which means if you put it into an account, you can actually deposit and spend as well in increments of one cent." -David Dindi ~~~ #digitalwealth #makewealthaccessible Atomic Invest

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Private Equity Firms Set Sights on Middle-Market Fintech and Payment Companies: Middle-market fintech and payment companies are gaining significance within the broader fintech mergers and acquisitions (M&A) landscape, attracting attention from private equity (PE) firms for their strong growth potential, stable profits margins, and solid customer bases, a new analyst note by private market data provider PitchBook says. Middle-market fintech firms fall between small, early-stage startups [...] The post Private Equity Firms Set Sights on Middle-Market Fintech and Payment Companies appeared first on Fintech News America. #Various #fintechbuyouts

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This is a big one - Gary Gensler presents the age old argument of regulation vs innovation. Under his leadership at U.S. Securities and Exchange Commission he is shaping the future of financial tech - from decentralised finance, online lending and consumer protection, to shifting #crypto to a more regulated environment. No mean feat. And with the election coming up this is going to be incredibly timely! #money2020 #crypto #fintech

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Curious about the impact of #ISO20022 on fintech? NYPAY has a great panel this Thursday on the topic- it's free register below. ISO 20022 is poised to be a game-changer for the fintech industry, bringing about several positive impacts: 1. Enhanced Interoperability: Imagine financial institutions speaking a universal language. ISO 20022 acts as that common ground, allowing seamless data exchange between different systems. This translates to faster transactions, fewer errors, and a more streamlined experience for everyone. 2. Richer Data for Innovation: ISO 20022 goes beyond basic transaction details. It allows for including richer, more structured data. This empowers fintech companies to develop innovative financial products and services with a deeper understanding of user needs. 3. Streamlined Operations and Efficiency: With standardized data formats, automation becomes easier. This translates to fewer manual processes, reduced errors, and overall cost savings for fintech companies. Regulatory compliance can also be simplified with ISO 20022's structured approach. 4. Openness to New Technologies: The beauty of ISO 20022 is its adaptability. It can accommodate new technologies and business models as they emerge, ensuring fintech companies stay ahead of the curve. 5. Level Playing Field for Fintechs: Legacy financial institutions often have complex internal systems. ISO 20022 creates a more level playing field by providing a common standard that fintech startups can easily adopt. This fosters a more competitive and innovative financial landscape. Overall, ISO 20022 is expected to be a major driver of growth and progress in the fintech industry. By enabling smoother data exchange, richer information, and streamlined operations, it paves the way for a future filled with exciting financial products and services.

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Learn how the recent classification of MCC 5968 to high risk is reshaping the subscription payment processing landscape for many merchants, with insights from payment expert Melanie Stout. Read more 👉 https://lttr.ai/AS379 #subscriptionmodel #subscriptioneconomy #subscriptionbusiness #subscriptionbilling #subscription #recurringrevenue #churn #involuntrychurn #negativeoption #autorenew #premium

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Managing fraud: macro. When I preach the value of AI in a stable fraud management strategy, I call out the importance of not allowing edge cases and exceptions to govern decisions. A stable fraud strategy should expect and be able to weather individual instances of successful fraud. Fraud events: micro. If a strategy prevents all but 10 instances of fraud, that means 10 people have a real-world impact to deal with. They need to unwind the practical things like invalid charges and account changes, but there's also a psychological impact that can be much more difficult to untangle. Reconciling these two dramatically different views of fraud can be challenging, but ideally we're moving closer and closer to talking about both as part of a whole. Being caught up in a fraud attack can feel personal, and unlike physical crime there's no obvious villain to battle. I try to stay connected to personal accounts like the one in this article because they give insight into both attacker and victim behaviors and influences. The linked piece is lengthy and at times goes deep into details that would rarely be included as part of a personal accounting of fraud. The narrative accounting of what happened between victim and attacker was most fascinating to me. The story is a familiar one (even when the fraud attacker is identified, they don't end up punished), but the deep level of personal details puts a very human face on the whole saga. Plus, it quotes David Maimon! An identity thief stole $5,000 from me. I spent two years tracking down how. (https://lnkd.in/gVzTDgYD) #fraud #fraudmanagement #fraudstrategy #identityfraud #accounttakeover #scams #scamawareness #victims #crime

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Great job today by Modern Treasury at their Transfer conference. Driving Enterprise Innovation was skillfully moderated by Erin McCune of Bain & Company. She says "payment nerd,” I think more “payment visionary!” Brian Glaze, CPA CAO STEWART TITLE GUARANTY NTS told us the value modernizing payment operations makes because it transforms customer experience. I took this vision away: Imagine embedding instant payments into a real estate closing app. When buyer, seller, and real estate agent shake hands at the end of a closing, funds move instantly. Julia Jansen VP Global Finance Operations at Navan pointed to many examples of how modernizing payment operations drives improved employee experience. Sam A. Modern Treasury's CTO compared the every country, every payment system and every bank differences to a Tower of Babel. We need to speak many languages or dialects to navigate it, adding later that payment systems never die. Expect the instant payment rails to increment not replace existing rails. Same message I heard at Nacha’s Smarter Faster Payments. Tim Boike’s VP Industry Engagement Federal Reserve Financial Services FedNow observations spoke to me. Government payments, from FEMA to benefits, will become an important growth accelerator. Everything is moving faster - think about the Fed’s RFC on extending Fedwire hours to 22 by 7 . Understanding how data flows from your corporate PAIN message to the PACS message sent to clearing can maximize value. Favorite fact of the day, from Dimitri Dadiomov Modern Treasury’s CEO, 11 is the average number of payment systems used by a company to manage payment operations. Best metaphor came from Doug Anderson CPO at AvidXchange, Inc.: “technology is like Legos for adults!” Snap them together the right way to build an AI/ML-enabled world of real time analytics, financial closes before the end of the month allowing course corrections and the agility to operate without traditional clock and calendar constraints. Best new word came from John D China of JPMorgan Chase & Co.: “collabatition!” The innovation economy moves forward faster through federation than by ‘building it all ourselves.' Best advice came from Joe Montana of Liquid 2 Ventures: ‘ask for help.’ Advice for startups but applicable to all. Asking = collaboration = solving problems. Finally, a new phrase for my lexicon – Spreadsheet of Doom. #fasterpayments #ISO20022, #RTP, #FedNow #Transfer #embeddedfinance #transferbyMT

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