Fintech

The CFPB’s proposed rules aimed at fintechs are a boon for big banks

Published

7 months ago

12 June, 2024

The CFPB's proposed rules aimed at fintechs are a boon for big banks

The fintech sector has brought unprecedented new levels of competition to the financial services sector. The new rules proposed by the Consumer Financial Protection Bureau would stifle it, writes Adam Kovacevich, CEO of the Chamber of Progress.

Jakub Jirsak/jirsak – stock.adobe.com

The one from last month Supreme Court decision affirming the financing structure of the Consumer Financial Protection Bureau means that the agency it’s here to stay. And for consumers worried about unfair practices on Wall Street, that’s a good thing.

The CFPB was established in the wake of the Great Recession to protect Americans from financial exploitation by financial institutions such as big banks.

But in recent years the CFPB has taken aim at a new target: fintech services.

CFPB Director Rohit Chopra is trying to repurpose laws originally written to oversee Wall Street and apply them specifically to services that offer consumers an alternative to big banks.

Under the CFPB’s proposed rules, PayPal, Apple Pay and Google Pay would all be eligible treaty like banks. Meta — which processes more cat memes than payments — would also be regulated like a bank under the CFPB’s proposal.

Dodd-Frank’s regulatory hurdles exist for a reason: to protect consumers from the financial chaos wrought by big banks. As the Great Recession revealed, safeguarding Americans from Wall Street’s worst impulses requires serious oversight.

But PayPal won’t cause a financial meltdown, and Amazon Pay won’t trigger a housing market collapse. However, the CFPB is moving forward and swinging its regulatory hammer to force square pegs into round holes.

To make matters worse, the CFPB has failed to determine why bank-level oversight of technology and fintech services is necessary. The consumer watchdog is skipping a crucial step in its rulemaking process by repeatedly asserting regulatory rules without public buy-in, stakeholder input or evidence of consumer harm.

The CFPB should determine a risk to consumers before initiating rulemaking. This process typically involves extensive research, public comment, and analysis of potential impacts. When it comes to fintech, the CFPB has continually failed to demonstrate any systemic risk to consumers or our financial system.

The federal courts have taken note of this failure.

In April, PayPal won a landmark legal victory against the CFPB, highlighting the precariousness of the agency’s current strategy. U.S. District Judge Richard J. Leon ruled that the CFPB had “no rational justification” for subjecting digital wallets to a rule requiring disclosure of fees for prepaid card services.

Judge Leone dried up the “arrogance” of the CFPB in applying the prepaid card rule to digital wallets without presenting evidence of harm to consumers or even conducting a cost-benefit analysis. Instead, the CFPB acted solely on speculation that PayPal’s product may one day be subject to fees similar to those used for prepaid cards.

Before imposing rules that could impede progress and harm consumers, the CFPB needs to show its work. Otherwise, the agency risks drowning consumer-friendly innovations in regulations aimed at Wall Street.

It is important to note the irony in the CFPB’s stance on fintech. democrats, Included Chopra himself, for a long time called for greater competition in the financial system. Fintech services have spurred unprecedented competition in the industry, disrupting traditional banks and democratizing mainstream financial services. The CFPB now threatens to undermine this progress by targeting Wall Street’s biggest competitor.

The CFPB should consider why fintech services are so popular with consumers. At the very least, the CFPB should identify clear, evidence-based risks to Americans before implementing new rules. Speculation does not provide a solid basis for regulation.

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FinCrypto Staff

We are the editorial team of FinCrypto, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on FinCrypto, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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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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