Arcady Lapiro

SOUNDS INNOCUOUS, but it's actually #OperationChokePoint2.0 in plain sight. Note the report confirms #fintech & #BaaS crackdown only applies to community & regional banks (CBOs/RBOs) but not to large banks--of course, no such "supervisory priority" applies to large banks...but of course. https://lnkd.in/gjBd68He

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#Financial #institutions are the #engine for #change towards a net-zero world as they touch virtually every sector of the #economy. We are inviting financial institutions (FIs) worldwide to pilot the upcoming draft Financial Institutions Net-Zero (FINZ) Standard.

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The CFPB 1033 rule is finally here, and it’s a big deal for the future of banking! With new regulations on consumer data access, the API game just got more complex. If you’re in banking or fintech, this is something you can’t ignore. Check out my blog post, where I break down the key players and the tech needed to navigate these new rules. #openbanking #API #CFPB1033

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Spoke with a BaaS bank that is having a lot of challenges in wire processing. One of its partner sends the wire and the bank has no idea who the ultimate sender is. They have been processing like this with a lot of manual callbacks and checks, until the regulators flagged them to stop. These problems are due to middlewares (inhouse or external), and the outdated wire systems that can't track multiple parties. None of the wire systems in the markets today are built for multi-party processing. Banks have responsibility to know all the parties in the transaction and screening them for OFAC. It becomes more complex to track and notify all the right parties as there are multiple systems and account numbers like FBO and Virtual accounts involved. We ended the conversation with a smile on his face. Modern payment use cases need a modern payment operating system. Finzly #BankOS #PaymentGalaxy

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The failure of Synapse is Lehman Brothers Inc. (LBI) all over again! Its just under a new breed of Broker-Dealers termed Banking-as-a-Service(BaaS) companies still too mathematically challenged to properly segregate client funds and calculate net capital in compliance with the SEC rules around it. Or could they have intentionally not deducted the UNSECURED loans given out by its subsidiary Synapse Credit LLC from such calculations? It is also shocking startups would depend on other startups for a core part of their business and even note this in their Risk Matrix or Business Continuity Plan as a low probability risk event. That's why at IMMIN, we run our own microlab, we build/host every part of our super-stack and we do not outsource! #ZERO_SAAS_IAAS #HELL_NO_BAAS #NO_FUN_IN_OUTSOURCING https://lnkd.in/gKrNCbSm

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I have been posting on how FinTechs often exploit Regulatory arbitrage in the short term, but do not have a path to profitable differentiation in the medium term Vs. large banks. Here is what appears to be another case, this time, not about Regulatory arbitrage, but a credit card for rental payments with no surcharges/ fees for acceptance and earning reward points on top of it! I am sure the pitch to VCs/ savvy investors and the sponsor Bank would have had the term "product-market fit" printed all over - what could go wrong?! Attract young and upcoming renters, lure them through rewards into making the card top-of-wallet, divert spend from other cards, earn interest on revolving balances, cross-sell mortgages when they are ready to buy a home etc. Turns out, at least based on this report, it was too good to be true and a lot went wrong in practice. And the article does not even mention "Pay-by-Bank" as the emerging, frictionless competitor, which IMO will largely displace Cards as the preferred form of payment for recurring expenses like rent & utilities, the lure of rewards notwithstanding! No reference here to yet another legal settlement concerning Card networks, which will reduce interchange fee earnings for Banks on most purchases. There are so many things going awry here even without hindsight 20X20! Cc: Simon Taylor

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The FDIC’s proposal is a positive step in providing soundness to the Fintech ecosystem by putting banks in its crosshairs. Ledgering and reconciliation are a critical component of money movement. The proposal puts responsibility for account records on the sponsor bank which undoubtedly will have ripple effects to onboarding and banking fees. FinTech companies commonly rely on third-party solutions to ledger and reconcile to their FBO/OBO balance. Discrepancies between bank records and third-party solutions create unnecessary burden and risk. From an operational and compliance perspective, bank-managed ledgering creates efficiencies for the FinTech and improves processes across the board. However, integrating various Fintech-level transaction information towards a bank ledger will not be an easy task. Banks arguably always had the obligation to ledger as part of their AML/KYC requirements. Without ledgering, a bank lacks visibility into fund activity on its account. Consent orders earlier this year allude to gaps with references to BSA/AML deficiencies. The impact I see from the proposal falls on banks that do not currently ledger their FBO/OBO accounts and their existing customer base. We may see banks exit the market while others lean towards acquisitions in make-vs-buy scenarios. A tidal wave is already in motion of Fintech migrating to sponsor banks that have ledgering infrastructure. 

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Was JPMorganChase wise to taunt the regulators with threats of raising fees and prices? If you haven't seen it, the The Wall Street Journal published an "exclusive" story on Chase, in which the bank's head of retail banking warned that "new rules that would cap overdraft and late fees will make everyday banking significantly more expensive for all Americans." Chase will "pass on the costs of higher regulation and charge customers for a number of now-free services, including checking accounts and wealth-management tools, if the rules become law in their current form." I've seen some comments on LinkedIn calling Chase's comments a "media mistake" and others claiming that the result of Chase raising rates/fees would be an exodus of its low- to middle-income customers. Two responses to those comments: 1️⃣ Chase doesn't give the WSJ an "exclusive" by mistake. 2️⃣ Chase isn't worried about losing LMI consumers. Chase's "threats" to raise prices is pretty hollow--they don't offer "free" checking accounts today. Customers can earn their way to the elimination of fees through balance and/or payment requirements. Chase may change those thresholds in the near future. According to the article: "In 2010, after the post-financial crisis overhaul of bank regulations, lenders warned that they would levy fees on debit cards because of a cap on some card charges—but few ended up doing so because consumers threatened to move their business." Huh? Durbin 1.0 erased "free checking" from the slates of the regional and megabanks. Community banks and credit unions clung to their free checking offerings--with negative profitability impacts. The comments from Chase are a calculated move on the bank's part to taunt the regulators and get them to move ahead with proposed regulations. Why would Chase do that? 𝘉𝘦𝘤𝘢𝘶𝘴𝘦 𝘵𝘩𝘦 𝘱𝘳𝘰𝘱𝘰𝘴𝘦𝘥 𝘳𝘦𝘨𝘶𝘭𝘢𝘵𝘪𝘰𝘯𝘴 𝘩𝘢𝘷𝘦 𝘢 𝘥𝘪𝘴𝘱𝘳𝘰𝘱𝘰𝘳𝘵𝘪𝘰𝘯𝘢𝘵𝘦𝘭𝘺 𝘯𝘦𝘨𝘢𝘵𝘪𝘷𝘦 𝘪𝘮𝘱𝘢𝘤𝘵 𝘰𝘯 𝘤𝘰𝘮𝘮𝘶𝘯𝘪𝘵𝘺-𝘣𝘢𝘴𝘦𝘥 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘪𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘪𝘰𝘯𝘴. There's another possible reason. A recent academic study looked at the impact of fintech, social media, and economic policy uncertainty (EPU) on bank stock prices and found that EPU has the most significant negative impact on bank stock returns. By forcing the hands of regulators, Chase might help to reduce economic policy uncertainty (at least as it pertains to banking), which could have a positive impact on bank stock prices (including, of course, Chase's). In any case, thinking Chase made a media mistake with the WSJ article is a mistake itself. Jamie and Marianne are way too smart to make mistakes like that. For the WSJ article: https://lnkd.in/e_bHGYZ4 To see the academic study: https://lnkd.in/eZ4A38HQ #banking

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Unlock the key to successful Core Banking selection with our latest white paper by Sébastien Brugallé: "Mastering Core Banking Selection: A Foolproof Guide!" 📘✨ Choosing the right Core Banking system is more than just a tech decision. It involves a strategic evaluation that impacts every facet of your financial institution's operations. This comprehensive guide provides you with a step-by-step approach, offering expert advice and actionable insights to help your financial institution navigate this critical choice with confidence.🚀 Download your copy now! 👉 https://hubs.li/Q02PhBsc0 #CapitalBanker #CoreBanking #Fintech #BankingInnovation #WhitePaper

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The FDIC & other regulatory bodies are exploring new reconciliation rules and processes between partner banks & fintechs. While the fall of Synapse & the loss of consumer funds have played a major role in this but it only solidifies what we have been talking about for almost a year at NAYA AI-Powered Financial Operations Platform Financial & operational accuracy in financial services is one of the unspoken of industry secrets and not without good reason. Synapse is not the only case but the one the made the headlines. Fintech has been growing rapidly in the last 15 years yet its infrastructure stack didn’t in comparison which lead to a lot of patch work and repurposing of systems not built for these use cases such as ERPs or in-house built ledgers. The need for purpose built solutions for financial services similar to what banks have with core banking is long overdue and only a handful of companies are tackling this problem. It’s why we have set our mission at NAYA to set a global standard for financial source of truth! https://lnkd.in/gUcy5AaG

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Bank on a Better Tomorrow with First Western Trust. Meet your new financial partners, where our associates are part of your community, and know your story and name. We work closely with you to understand and meet your unique needs, offering personalized solutions beyond traditional banking. Experience a banking relationship that values you as more than just an account number. Achieve your financial goals with sophisticated services from a team you can trust. https://hubs.la/Q02DDsv60 *Personal and business banking services offered through First Western Trust Bank, Member FDIC; Investment, Trust and Asset Management Services are Not a deposit, Not guaranteed by the Bank, May Lose Value

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This is a great share American Banker. This is a common issue among banks and credit unions, which is one reason why BankShift exists. Having experience at top U.S. financial institutions, we empathize with navigating these challenges as we’ve been there before. We’re into solving problems for the toughest challenges that most financial institutions face. Please feel free to reach out. https://lnkd.in/gUvSgFYD Here are some tips to reduce frustration: 1. Implement a rigorous vendor management screening process to avoid hiring individuals without the necessary experience. 2. Ensure vendors possess intellectual property and a team with a proven track record of transforming financial institutions. 3. Move away from lengthy contracts, which benefit providers with recurring revenue but are not advantageous for financial institutions. 4. Conduct thorough technical due diligence before signing contracts to ensure compatibility across the entire institution. 5. Only deal with bundled services outside of the core systems and try not to create spaghetti (API) monsters. Note: If you already have a spaghetti monster, our digital hub (gateway) to monitor all your vendors is the cheapest start with immediate upside to your call center. 👊 #digitalfirst #transformation #creditunions #banks

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Let’s Talk About Bank Connectivity Requirements Gathering for TMS Implementations. Treasury teams frequently encounter a torrent of challenges when establishing digital connections with banks during a TMS implementation. Conducting thorough scoping and blueprinting for each banking partner before the project kicks off not only streamlines vendor qualification, but also significantly accelerates onboarding. This proactive approach helps clarify requirements, explore possibilities, and address potential constraints. If you're preparing for a treasury technology project that includes bank connectivity, take a look at the high-level checklist below to ensure you're ready for a smooth implementation journey! #Treasury #TreasuryManagement #TMS #Banking #Connectivity #BusinessRequirements #ProjectManagement

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In 2022, Wells launched a credit card with Bilt Technologies, a fintech startup. But ...losing as much as $10 million every month..the program has also been hit by fraud. The partnership also poses money-laundering risk. Khwaja's Reflections from Board Oversight Standpoint: Wells Fargo has been making some (good) progress on the corporate governance front. Some of the forward-thinking areas include: ✅ Enhancing disclosures regarding board oversight of human capital management and risks, culture and ethics, and framework for workplace harassment and discrimination.  ✅ Technology and Innovation as one of five strategic pillars. More can be done. Here is My Take: ✅ There is a misalignment or lack of interlock between tech/innovation and risk oversight. ✅ I recommend the lead director establish a standing technology/innovation and cybersecurity committee. ✅ Make the pie bigger for value creation and don't delegate innovation/technology agendas to other committees such as audit or risk. ✅ Per proxy report, 38% of Director nominees only have technology/innovation/cybersecurity expertise while 92% have risk management expertise. Get more innovation/technology/Cybersecurity expertise. ✅ Get the right incentives aligned to take the lead in the innovation game. What do you think? *********Subscribe here to get all my 🔥 takes on the Board and C-suite effectiveness. 👉🏿 https://bit.ly/3VCkqyV ******** #CEO #KSgems #TheVentureMindset #Startup #Technology #Innovation #BoardOversight Manuj Aggarwal Nitin Gaur Christopher Hetner Ilya Strebulaev Alex Dang https://lnkd.in/euXAN-9b

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Are bank regulators focusing enforcement activity in the right place to create a healthy banking system?  The fact that a third of the Q1 public enforcement actions related to partner banking gives me pause.  A little historical context.  I recently found an article showing that in Q1 2008, with the global financial crisis just over the horizon, just over a third of bank regulators’ public enforcement actions were related to BSA/AML. With the benefit of hindsight, regulators would certainly have focused priorities very differently at that time.  And it’s hard to argue now that partner banking is anything like the most important issue facing the banking system. Matt Harris recently made a cogent argument that the immediate challenges banks currently face with underwater securities and commercial real estate are only the tip of the iceberg.  If you haven’t seen it, follow the link to his analysis of the impact that AI will have in compressing net interest margin and the consequent need for banks to build scale and/or non-interest income. I don’t endorse everything Matt says about regulators, but I strongly agree that many banks need to get creative to have a long-term future.  And that requires regulators who don’t overreact to mistakes of strategy and execution with limited impact on safety and soundness, consumer protection, or financial crime. As an example, I was recently helping a bank whose regulators had found gaps in beneficial ownership records of its fintech clients.  I was puzzled that the bank had gotten this wrong on fintech clients but not on its core business.  The Bank told me they were also now fixing similar issues in their core business, but the regulators hadn’t even examined those files. I’ve said before that a lot of enforcement actions we have seen in BaaS have been fully justified and I stand by that.  But recently I’m seeing an increasing number of cases where regulators are, in effect, examining and enforcing more stringently for BaaS business than traditional business. Regulators genuinely want community banks to overcome the challenges of the current environment.  They can help by ensuring that banks conducting BaaS and other novel activities don’t face regulatory equivalent of police speed guns looking for cars driving a mile over the speed limit. 

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BREAKING: Evolve Bank & Trust has paused processing certain wires over $3,000, multiple sources tell me: For payments above $3,000, originating institutions typically must collect and retain the name and address of the originator, the identity of the beneficiary's institution, and the name, address, account number, and specific identifier of the beneficiary, if available, per 31 CFR 1010.410. At $3,000 the so-called "Travel Rule" also kicks in, requiring originating institutions to include certain information about the transmitter and recipient in funds transmittal orders. (The Travel Rule does not apply funds governed by the EFTA/Reg E, like ACH or card payments.) That Evolve has paused processing wires over $3,000 suggests the bank may lack the ability to collect, retain, and transmit as necessary certain data points on customers originating wire transfers. Representatives for Evolve did not immediately respond to a request for comment.

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Open banking coming to digital wallets? https://lnkd.in/e2aFawgd The Consumer Financial Protection Bureau (CFPB) swung for the fences today, issuing the final version of Rule 1033 on personal financial data rights. The scope is much wider than anticipated—covering not just bank accounts, but also data in payment apps and digital wallets. As the CFPB notes, digital wallets now play a key role in our financial lives, managing payments from credit cards, prepaid accounts, and checking accounts all in one place. This means Rule 1033 applies broadly to digital wallets and payment apps that facilitate payments from covered accounts, even when they involve pass-through payments from other institutions. Why does this matter? Because it opens up financial data for AI to analyze and learn from consumer spending patterns—helping people make smarter financial decisions. The inclusion of digital wallets is a game changer, reflecting how many of us actually manage their finances today. Some say this data is available today and the regulation is unnecessary - and it is through providers like Plaid and others, but at a cost. The digital wallets are mostly closed today, with little or no access to the data they have. #CFPB #Rule1033 #DigitalWallets #FinancialData #AI #ConsumerRights #Fintech #PersonalFinance #DataRights #openbanking #smartoffers #dfinitiv

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📣 The CFPB's final Rule 1033 is HERE ... well, almost! The final Rule 1033 is expected to be published any day now, and it will impact the landscape of #OpenBanking for the next few years. Our team will be ready to go with a live "unboxing" of the final rule when it's published. Sign up to be the first to get ✅ The key points of the final rule without all the jargon ✅ A recap of our early predictions: what we got right (and wrong) ✅ Expert analysis on how Rule 1033 will impact merchants and fintechs Save your spot now 👇 https://lnkd.in/e3DvTNH7

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