Fintech

McKernan, Chopra Want Clearer Guidance for Banking-Fintech Industry

Published

7 months ago

10 July, 2024

McKernan, Chopra Want Clearer Guidance for Banking-Fintech Industry

“That guidance, at least as I read it, is actually more tailored to the services that a bank gets, rather than working through a service provider or having a service provider work on behalf of a bank,” McKernan said. “We may have an opportunity to think about some business-specific guidance within this third-party risk management framework that is more clearly articulated.[,] ideally also some clear, hard rules of the road, as we think about certain kinds of large partnerships. … I think that’s a promising thing to explore.”

At the Dragon/Bloomberg

WASHINGTON — Federal Deposit Insurance Corp. board member Jonathan McKernan on Wednesday suggested that regulators consider making their guidance on third-party risks more specific in order to foster innovation and competition in the financial services industry.

The remarks, delivered to an audience at Semafor’s “Banking on the Future: The Next Era of Fintech” conference, highlight the growing involvement of regulators in analyzing banks’ growing reliance on partnerships with fintech firms.

In June 2023, the federal banking regulators, the Federal Reserve and the Office of the Comptroller of the Currency, along with the FDIC, provided a set of risk-based principles that banks should use when developing relationships with third parties.. The guidance establishes the importance of thorough risk management practices, tailored to the risk and complexity of each third-party relationship. The agency’s recommendations to banks include developing contingency plans to manage or terminate third-party relationships, as well as monitoring such partners for safety and soundness or legal compliance.

McKernan’s call for clearer, asset-based guidance echoed a statement made earlier in the day by his fellow FDIC board member, Consumer Financial Protection Bureau Director Rohit Chopra, whose agency regulates fintechs for compliance with consumer protection laws. At the conference, Chopra advocated examining current rules to ensure they allow new fintech entrants to compete with established participants. He noted that the current complexity of the rules makes it difficult for small entrants to make decisions.

“One of the things we’re trying to do is try to answer the call to make sure that fintech companies, startups and future companies that don’t exist, don’t have to deal with extortion from lawyers around them trying to get money out of them by waving this flag of uncertainty,” he said. “The rules need to be clearer, they need to be simpler, and they need to not be designed just for the biggest incumbents, which I think is a bit of a system that we have.”

McKernan then supported the spirit of Chopra’s call to lower barriers for companies to enter the banking-fintech sector.

“It is important that we ensure that this regulatory framework does not empower incumbents,” he said. “It does not place undue barriers to entry or unduly impede innovation.”

Much of the banking regulatory action over the past year at the FDIC has come against the backdrop of a scandal after a A series of Wall Street Journal stories have detailed serious workplace misconduct issues at the agency spanning decades.

Following the report, the FDIC responded by establishing a special committee to investigate the claims, appointing FDIC board members Michael Hsu and McKernan to lead the investigation. The law firm Cleary Gottlieb Steen & Hamilton was ultimately chosen to undertake the independent review, the findings of which were published last month, largely corroborating the findings of the Wall Street Journal investigation. After subsequent congressional hearings on the report and calls for his resignation, current FDIC Chairman Martin Gruenberg announced that he would step down upon his replacement, who has since been appointed but awaits Senate confirmation in an election year.

McKernan responded to questions about the FDIC’s ongoing efforts to reform its culture in the wake of the reports. The FDIC official stressed the need for a rapid leadership change at the agency to boost staff morale and retention. McKernan noted that the FDIC inspector general has flagged human resources issues, particularly retention, as one of the most pressing strategic risks.

“We really need a fresh start at the top… if we don’t do that, I think it will really test our ability to deliver on our mission of safety and soundness, consumer protection and financial stability,” he said. “I think it’s really important that the entire Board of Directors step up during this interim period, while we wait to confirm a new chairman, we need to have the entire Board engaged, ideally on a nonpartisan basis, to make our cultural transformation happen.”

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Related Topics:CFPB F.D.I.C.Politics and politics Regulation and compliance

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Fintech

Lloyds and Nationwide invest in Scottish fintech AI Aveni

Published

6 months ago

29 July, 2024

FinCrypto Staff

Lloyds and Nationwide invest in Scottish AI fintech Aveni

Lloyds Banking Group and Nationwide have joined an £11m Series A funding round in Scottish artificial intelligence fintech Aveni.

The investment is led by Puma Private Equity with additional participation from Par Equity.

Aveni creates AI products specifically designed to streamline workflows in the financial services industry by analyzing documents and meetings across a range of operational functions, with a focus on financial advisory services and consumer compliance.

The cash injection will help fund the development of a new product, FinLLM, a large-scale language model created specifically for the financial sector in partnership with Lloyds and Nationwide.

Joseph Twigg, CEO of Aveni, explains: “The financial services industry doesn’t need AI models that can quote Shakespeare, it needs AI models that offer transparency, trust and, most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, vetted by financial services experts for specific financial services use cases.

“FinLLM’s goal is to set a new standard for the controlled, responsible and ethical adoption of generative AI, outperforming all other generic models in our selected financial services use cases.”

Robin Scher, head of fintech investment at Lloyds Banking Group, says the development programme offers a “massive opportunity” for the financial services industry by streamlining operations and improving customer experience.

“We look forward to supporting Aveni’s growth as we invest in their vision of developing FinLLM together with partners. Our collaboration aims to establish Aveni as a forerunner in AI adoption in the industry, while maintaining a focus on responsible use and customer centricity,” he said.

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Fintech

Fairexpay: Risk consultancy White Matter Advisory acquires 90% stake in fintech Fairexpay

Published

6 months ago

29 July, 2024

FinCrypto Staff

Treasury Risk Consulting Firm White Matter Alert On Monday he announced the acquisition of a 90% stake in the fintech startup Fair payment for an undisclosed amount. The acquisition will help White Matter Advisory expand its portfolio in the area of cross-border remittance and fundraising services, a statement said. White Matter Advisory, which operates under the name SaveDesk (White Matter Advisory India Pvt Ltd), is engaged in the treasury risk advisory business. It oversees funds under management (FUM) totaling $8 billion, offering advisory services to a wide range of clients.

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White Matter Advisory, based in Bangalore, helps companies navigate the complexities of treasury and risk management.

Fairexpay, authorised by the Reserve Bank of India (RBI) under Cohort 2 of the Liberalised Remittance Scheme (LRS) Regulatory Sandbox, boasts features such as best-in-class exchange rates, 24-hour processing times and full security compliance.

“With this acquisition, White Matter Advisory will leverage Fairexpay’s advanced technology platform and regulatory approvals to enhance its services to its clients,” the release reads.

The integration of Fairexpay’s capabilities should provide White Matter Advisory with a competitive advantage in the cross-border remittance and fundraising market, he added.

The release also states that by integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

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Fintech

Rakuten Delays FinTech Business Reorganization to 2025

Published

6 months ago

29 July, 2024

FinCrypto Staff

Rakuten (Japan:4755) has released an update.

Rakuten Group, Inc. and Rakuten Bank, Ltd. announced a delay in the reorganization of Rakuten’s FinTech Business, moving the target date from October 2024 to January 2025. The delay is to allow for a more comprehensive review, taking into account regulatory, shareholder interests and the group’s optimal structure for growth. There are no anticipated changes to Rakuten Bank’s reorganization objectives, structure or listing status outside of the revised timeline.

For more insights on JP:4755 stock, check out TipRanks Stock Analysis Page.

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Fintech

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

Published

6 months ago

29 July, 2024

FinCrypto Staff

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

You are reading Entrepreneur India, an international franchise of Entrepreneur Media.

White Matter Advisory, which operates under the name SaveDesk in India, has announced that it is acquiring a 90% stake in fintech startup Fairexpay for an undisclosed amount.

This strategic move aims to strengthen White Matter Advisory’s portfolio in cross-border remittance and fundraising services.

By integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

White Matter Advisory, known for its treasury risk advisory services, manages funds under management (FUM) totaling USD 8 billion.

Founded by Bhaskar Saravana, Saurabh Jain, Kranthi Reddy and Piuesh Daga, White Matter Advisory helps companies effectively manage the complexities of treasury and risk management.

The SaveDesk platform offering includes a SaaS-based FX market data platform with real-time feeds for over 100 currencies, bank cost optimization services, customized treasury risk management solutions, and compliance guidance for the Foreign Exchange Management Act (FEMA) and other trade regulations.

Fairexpay is a global aggregation platform offering competitive currency exchange rates from numerous exchange partners worldwide. Catering to both private and corporate customers, Fairexpay provides seamless money transfer solutions for education, travel and immigration, as well as simplifying cross-border payments via API and white-label solutions for businesses. Key features include competitive currency exchange rates, 24-hour processing times, extensive currency coverage of over 30 currencies in more than 200 countries, and secure, RBI-compliant transactions.

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