Mastercard makes open banking move; Cross River Bank shines in PPP lending

Wall Street Journal

Sign of the times

Credit card rewards “have moved from the airport to the quarantined home. Top travel cards from American Express and JPMorgan Chase have added lucrative bonuses for spending at grocery stores and restaurants. Instead of credits toward travel expenses, some cards are reimbursing for streaming services, meal delivery and even cellphone plans. ”

Financial Times

Mastercard’s move

Mastercard said it will buy U.S. “open-banking company Finicity in a $1 billion deal, expanding its footprint in a growing area of business that it said would only accelerate because of the coronavirus crisis.”

“Open banking, which gives customers more control over how their bank, credit card and savings data are shared, has had a slower birth in the U.S. than in Europe, where regulatory frameworks for information-sharing are much more developed. However, a handful of companies such as Plaid and Finicity have carved out businesses building technology that allows financial services data to be shared and used by fintechs and big banks for everything from loan decisions to financial wellness tools. Mastercard already has its own open-banking platform in Europe and began talks with Finicity before the crisis.”

Fed's burden

The Federal Reserve “bears some responsibility for American inequality and should remedy it to the greatest extent possible,” Karen Petrou, managing partner at Federal Financial Analytics, writes in an FT op-ed. “The Fed could take concrete actions to address the fact that monetary policy now benefits primarily the wealthy. And there are easy regulatory solutions readily at hand to make a swift and dramatic difference.”

Joining the club

Zopa, “the world’s oldest peer-to-peer lender,” according to the FT, “has received a full banking license [in the U.K.] as it looks to mount a direct challenge to traditional banks and avoid the funding problems afflicting many of its peers. The 15-year-old company will introduce its first savings accounts this week before expanding into credit cards in the fourth quarter. The company currently provides car finance and personal loans on behalf of retail and institutional investors but decided to pivot into banking in 2016 to access more stable ways to fund its loans.”

“We never thought we would be launching in such an extraordinary set of circumstances, but we believe that, if anything, these circumstances make the proposition even more relevant,” CEO Jaidev Janardana told the FT.

Asleep at the wheel?

German financial regulators “are coming under fire for failing to investigate what increasingly appears to be one of the country’s worst ever accounting scandals.”

“The Wirecard scandal did not come out of the blue,” said one member of parliament. “It’s a mystery to me why the finance minister and BaFin did not shed light on the matter much earlier.”

New York Times

The David of PPP lending

Tiny Cross River Bank, a one-branch community bank in Teaneck, N.J., “stands among giants” when it comes to making small business loans. “Cross River has churned out loans to more than 106,000 businesses through the Paycheck Protection Program. That puts it just behind three of the country’s most prolific lenders: Bank of America, JPMorgan Chase and Wells Fargo.”

“Cross River has spent the past decade carving out a lucrative business as a bank for the financial technology start-ups trying to compete with traditional banks. Cross River was one of the quickest and most aggressive” in making PPP loans, “working with dozens of so-called fintechs to scoop up borrowers who couldn’t get the attention of the big banks. More than 30 firms funneled some or all of their borrowers through Cross River, including large companies like Intuit, the maker of the popular QuickBooks accounting software, and Kabbage, an online small-business lender. Other borrowers arrived through niche businesses like Divvy, an expense management tool, and Womply, a small-business marketing system, that wanted to serve their customers.”

Washington Post

A place in the sun

Wells Fargo said it “will buy 150 megawatts of solar power from Shell Energy, a move that demonstrates widening corporate interest in renewable energy even among some of the strongest supporters of fossil fuels. The deal is modest: Wells Fargo says the 150 megawatts, purchased from three locations in Virginia and one in California, would meet about 8% of its global energy needs. But it carries symbolic value. Wells Fargo, the second-biggest lender to fossil fuel companies over the past four years, is buying carbon-free electricity from Shell, a company that’s been in the oil business since the 1880s.”

E.J. Bernacki, the bank’s spokesman for sustainability and corporate responsibility, told the Post that “as the [energy] sector has evolved, so has our business. While Wells Fargo continues to work with our conventional energy and utility customers,” it was also “one of the largest lenders and investors in renewable energy and clean technologies.”

Quotable

“I completely accept the criticism that all of us including BaFin have to review a couple of strategies and measures, which we have taken or have not taken, once we sort out the immediate crisis.” — Felix Hufeld, president of Germany’s financial regulator, about the agency’s failure to uncover the Wirecard scandal.