On today's episode of Banking on Disruption Daily, we explore the anticipated dip in net interest income for America's biggest banks as they brace for the weakest lending figures in two years. The decline follows the initial benefits from Federal Reserve rate hikes. Despite increasing competition from neobanks and FinTech companies, traditional banks are exploring partnerships to provide more comprehensive services, targeting lower-income households and small businesses. Citibank battles a lawsuit claiming it fails to adequately protect fraud victims, arguing that existing security measures absolve it of liability when consumers fall prey to scams.

In regulatory news, the FDIC extends the public comment period for its proposed rule on brokered deposit restrictions, aiming to gather more stakeholder feedback. Meanwhile, JPMorgan Chase's CEO, Jamie Dimon, criticizes regulatory barriers hindering companies from going public and advocates smoother paths for mid-sized bank mergers. Synchrony introduces a solution to streamline pet care financials by linking pet insurance with its CareCredit card, directly crediting reimbursements to the card. Finally, Epic Games secures a significant legal victory against Google over payment policies, with implications for digital payment strategies and competition.

In today's episode, we start with Plaid's new Pay by Bank for Bill Pay product, which simplifies and secures direct bank account payments for businesses, enhancing the user experience and reducing costs. The solution integrates smoothly into current payment processes and is already being used in sectors such as telecommunications. Plaid also collaborates with MoneyLion, providing lenders with better cash flow insights, enabling them to make more informed lending decisions and broaden access to financial products for underserved consumers.

On the regulatory front, the CFPB is cracking down on auto-finance companies for wrongful car repossessions and deceptive charges, requiring refunds and promoting transparency in servicer practices. Discussion also touches upon rising interest rates and fees by credit card issuers in response to proposed caps on late fees, reflecting broader economic challenges. Finally, we cover the slowdown in consumer credit growth, highlighting a drop in credit card balances amid high interest rates and increased delinquency rates.

First up the 2024 FDIC Small-Business Lending Survey, which highlights the ongoing importance of in-person interactions in the lending process despite technological advancements.

Next, HSBC's new venture, SemFi, partners with Tradeshift to offer embedded finance solutions, addressing the growing demand despite application challenges.

We then examine insights from Thredd's CEO on the evolving four-party card payment model, driven by increased demand for digital financial solutions.

In global news, a Moscow court has frozen $372 million in assets of Bank of New York Mellon and JPMorgan Chase tied to actions by Ukraine's central bank, underlining financial tensions with Russia.

Finally, we discuss how partnerships between FinTechs and traditional banks are helping scale real-time anti-money laundering compliance, overcoming infrastructure challenges through collaborative innovation.

Banking on Disruption Daily - October 3rd, 2024

- JPMorgan Chase plans to open 100 branches in low-income areas, incorporating financial literacy and small business support.

- U.S. private sector employment surged in September, adding 143,000 jobs, notably in leisure and hospitality.

- FDIC Chairman emphasizes the significance of relationship-driven lending for small business stability.

- Fed Governor Bowman calls for reevaluation of regulatory thresholds to better align with bank risks.

- FIS launches Digital Trading Storefront, offering banks a personalized cross-asset trading experience.

- EU's AI Act could impact U.S. banks, necessitating advanced AI systems for fraud detection.

- Apollo's CEO warns against further Federal Reserve rate cuts, citing possible negative economic impact.

Banking on Disruption Daily for Wednesday the 2nd of October, 2024

- Federal Reserve ends an 11-year-old enforcement action against Citigroup, marking improvements in their compliance controls.

- Federal Reserve Governor Lisa Cook calls for a unified regulatory approach to mitigate AI risks in financial services.

- Federal Housing Finance Agency proposes changes to enhance liquidity and strengthen financial operations for the Federal Home Loan Banks.

- CFPB targets illegal practices by medical debt collectors, proposing a rule to prevent unsubstantiated bill reporting.

- Mastercard acquires Minna Technologies to streamline subscription management via banking applications.

- Digital Federal Credit Union and First Tech Federal Credit Union announce a merger, creating a $28.7 billion entity to foster innovation.

- OpenAI expands voice assistant capabilities, enabling third-party app integration, showcased at their recent developer event.

TD Bank has agreed to pay over $20 million to resolve a spoofing case involving fraudulent orders by a former trader. The settlement includes a three-year deferred prosecution agreement and significant penalties, plus enhancements to their compliance programs.

Major banks are entering the buy now, pay later market by offering debit-based installment plans. This move allows customers to split their debit purchases into four equal payments, directly competing with firms like Affirm and Klarna. Major banks such as J.P. Morgan Chase are launching their own BNPL products.

NCR Voyix has completed the sale of its digital banking unit to Veritas Capital for $2.45 billion. Now rebranded as Candescent, the largest independent digital banking platform in the U.S. will continue operations under its new name, serving over 1,300 financial institutions and 20 million users.

- Wells Fargo is embroiled in a new lawsuit over allegedly insufficient interest rates on uninvested cash in advisory and brokerage accounts, adding to their legal woes.

- A recent FDIC Office of Inspector General report calls for stronger conflict of interest training for FDIC employees to bolster transparency and accountability.

- Recent FDICenforcement actions highlight serious internal risks in banks, with multiple high-profile cases of executives being removed for failures and misconduct, emphasizing the need for better internal controls and AI-driven fraud detection.

- Payfare is withdrawing its 2024 financial guidance as DoorDash ends their core services agreement. Despite the setback, Payfare remains financially strong and is exploring new initiatives and client programs.

- Fiserv's joint venture with Wells Fargo Merchant Services will expire in April 2025. Fiserv expects a significant impairment but will continue providing services under a new agreement while eyeing partnerships with Walmart and PayPal.

- Umpqua Bank is expanding into winery banking during a tough period for the industry, showcasing their strategic adaptability and pursuit of commercial lending growth.

- TAB Bank extends a $2 million loan to Dirty Dough, a Utah-based gourmet cookie franchise, leveraging local trends and reinforcing their robust loan growth.

- Chime Financial has chosen Morgan Stanley to lead its IPO, aiming for a 2025 launch after a previous postponement in 2022.

- Treasury Secretary Janet Yellen calls for stronger financial regulations to improve resilience against bank runs and other risks.

- Wells Fargo submits a review to the Federal Reserve in hopes of lifting a cap on its assets imposed in 2017, while agreeing to address deficiencies in risk management.

- Synchrony and Dick’s Sporting Goods extend their credit card program partnership, continuing to offer athletes exclusive rewards and benefits.

- The Federal Reserve's recent interest rate cut leaves small business owners uncertain, with some planning expansions and others calling for more significant cuts.

- The FTC launches "Operation AI Comply," targeting companies making deceptive AI claims, with several enforcement actions already taken.