JJ Hornblass, Royal Media CEO 

Hi everyone. I’m JJ Hornblass host of Fintech Unfiltered. Welcome to this edition of the podcast from Bank Innovation, the leading digital news service on banking technology and FinTech. This is our Weekly Wrap for what’s happening in banking innovation for the week of November 2, 2020. Of course, I want to thank the Bank Innovation advertisers for their support. Before we get into the podcast, a special thanks to Blend, Cardlinks, Mambu and Q2ebanking for their support. Thank you. I’m pleased to be joined by Rick Morgan and Bianca Chan of the Bank Innovation team. It is Thursday, November f5 2020. This week, was election day. And boy, what an election it was, or should I say is. This podcast, it is late in the afternoon on Thursday and a winner has yet to be declared. We’ll come back to that in just a moment. The Justice Department today also filed an antitrust lawsuit in federal court in San Francisco arguing that Visa’s announced plan to acquire Plaid would illegally extend Visa’s dominant position in the market and should be stopped. This week. Also the Chinese government put the kibosh on Ant Financials IPO and the gig economy companies including Uber and DoorDash, won passage of a California ballot measuring out of California protecting their contract worker systems. And that was on election day. That was also significant this week. And finally, this week, did I mentioned that there was an election that happened. This is a remarkable state of affairs that we’re in as of this moment. Results from Georgia, Nevada, Arizona, and North Carolina, as well as Pennsylvania, and yet to be certified. Joe Biden, the Democratic nominee, nominee presidential nominee, has a number of combinations of these states that will yield him a victory. And he seems to be on track to convert on at least a couple of these states in the balance. In other words, it appears as though Joe Biden will be the next president of the United States. We are not announcing that here. What we are going to do is talk about the implications of this potential presidency with the big caveat that it hasn’t been announced. But should the Biden presidency or campaign become the Biden presidency, you both looked into some implications of the campaign on a number of different fronts. There were three main areas of focus, as I recall, implications for open banking implications for banking charters, and the potential for a public credit reporting agency. Among these three areas, which had the most sensitivity or the greatest ramifications, should there be a Biden presidency? Bianca, you want to take that one?

Bianca Chan, deputy editor at Bank Innovation 

Yeah, well, I look into specifically the open banking landscape and how that might change. And the reason why I didn’t say anything is because the industry analysts that we spoke to said there might be more common ground and there is difference when it comes to administrations with open banking. There are some subtle differences, though, under Biden administration, and that is that the Biden appointed CFPB director might might be a little bit more hands on in terms of the burden and obligations put on banks are relatively speaking, compared with the Trump appointed current CFPB director, and that Democrats traditionally have made consumer protection a bigger part of their platform. So for the fintechs, and banks that kind of, you know, tough open banking, as we’re doing this for the best interest of the consumer, that alignment should help.

JJ Hornblass 

Rick are these other areas, I mean, where was the Biden presidency potentially more impactful?

Rick Morgan, news editor at Bank Innovation

Definitely the public credit reporting agencies. That was an initiative put forth by a joint Biden and Bernie Sanders statement when they were talking about potential policies down the road. The public credit reporting agency was something they put forth as a way to eliminate bias and lending practices and just create a more open financial system, more inclusive financial system. It’s not something that’s really even on the radar of Trump, to say the least, and the analysts that I spoke with said it’s probably most, it’s something that Biden would pursue, and definitely not Trump. So I think that was the one that has the biggest implications for potential for change, depending on who wins.

JJ Hornblass 

You know, it’s interesting, there, I think there is some perception that this Trump administration has had like zero consumer protections. Just today, the CFPB took action against two lending companies in two different sectors. But, you know, suffice it to say, it’s, it probably isn’t, you know, it doesn’t rise to the level of maybe a classic democratic administration. But it is also fair to say that it’s not zero. It hasn’t been there hasn’t been zero enforcement. They haven’t been handing out banking charters willy nilly. And anything you saw the whole, you know, they all back and forth on on the FinTech charter, which really, you know, you would you would think that there would be a willingness to, to open that charter dynamic, more freely under a kind of, you know, a republican administration. You know, they’re still we’re vetting that pretty closely. And they were pretty stingy with the charter under a republican administration.

Rick Morgan 

And it was introduced by Thomas Curry, who was an Obama appointee in the OCC. So it’s something the FinTech charter, the payments charter is definitely something that sort of splits party lines in a lot of ways and is, you know, has support on both sides of the aisle, but also has disagreement, you know, it’s facing its fair share of resistance, but it’s it’s hard to categorize as like a party thing

JJ Hornblass 

I mean, I think one of the things I wonder about is whether or not they’ll be counter actions in, in a democratic administration, for spite, just because this has been such a divisive period, that there is kind of a, maybe a feeling of like, we need some payback. For all that has got I know, it sounds childish, but politics has been childish, the last four years. So I wonder what you know, how that’ll play out in financial services, whether a different administration CFPB, may just kind of, you know, blanketly try to legislate through enforcement, which is something that happened under Obama to some degree, to some degree in specific sectors, probably most notably in in the auto finance sector, which Bianca you’re familiar with, where there was an in an effort to as they say, in the industry, you know, legislate through regulation. I wonder.

Bianca Chan 

Yeah, thinking about, you know, actions taken if the administration changes in terms of spite, I think a symbolic action that I could venture to guess would be for sure, a new CFPB director, I think that’s become somewhat of a party line symbolic position within the regulatory framework. 

Rick Morgan

That’s pretty standard, that’s every administration appoints their own cabinet members.

JJ Hornblass  

Let’s turn our attention to some industry specific news not necessarily political, although it’s hard to focus on anything else these days, but let’s try. Wells Fargo announced a couple of new startups that joined its accelerator program. Bianca, what are those startups say about Wells Fargo’s technology needs or gaps?

Bianca Chan  

Yeah, that is the key here. So there’s two fintechs that are numbers 26 and 27 of all companies in Wells Fargo accelerators, portfolio, one is called Extend and it’s a digital payment infrastructure, specifically, providing modern card experiences. And so what we can glean from this not even glean, what we can say about this is it shows maybe a gap or at least a desire or a push within Wells Fargo’s commercial credit card team. We spoke with the head, the guy who heads up Wells Fargo accelerator, and he said that every time a FinTech is admitted into the program, it’s directly tied to a business line. I guess we could say problem or you know, gap is an area for improvement. And so specifically, right now they’re exploring how the commercial card team can use Extend’s technology to kind of modernize that corporate card experience letting their corporate clients kind of manage these cards that their employees use. And so we can kind of glean a gap from there. And then Oliver, which is an interesting company, there a legal servicing platform. And if you don’t know what that means, it basically means that is a platform that connects Wells Fargo, with local authorities and local courthouses. I think the end goal is to embed local regulations and processes into Wells Fargo’s technology. Now, they’re still working out how that communication that happens on the platform will be embedded into the technology. But I think it’s kind of just having this knowledge of local regulations and processes.

JJ Hornblass  

Yeah, I mean, I guess Extend right, that’s the first one. That seems like something of a maybe a reaction to, or an endeavor on the part of Wells to try to make up some ground on American Express, which has such a profound, significant position on commercial cards. The other, Oliver seems more intriguing if this is like a platform to allow for the local authorities to submit regulations to Wells.

Bianca Chan  

Yeah. And to facilitate communications between the two and I imagine to share data and yes, like regulations, laws, processes, but it’s basically the platform facilitates that kind of communication.

JJ Hornblass 

Okay, well, turning our attention to the payments world, Rick, some interesting Venmo and Zelle numbers this week, who’s winning between those two, peer to peer payments platforms?

Rick Morgan  

Well, if you just go by the numbers, strictly, it looks like Zelle is winning this quarter, Zelle processed about $84 billion in payments compared to Venmo’s $44 billion. So you know, obviously, $84 billion is quite a bit higher. But a lot of people will tell you that those Zelle numbers, it’s hard to call that winning necessarily, because Zelle has a captive audience, people who are already using their banking app to transfer money. So it’s not necessarily you know, net new customers. Whereas Venmo’s increase in numbers actually signifies more users using it more users spending more money and, you know, gaining new customers and users through word of mouth. So certainly Zelle has the higher volume, but those numbers aren’t quite apples to apples.

JJ Hornblass 

I mean, you know, the whole Zelle initiative was to help banks. You know, stanch the payments, bleeding to third party payments companies right there to kind of keep their payments within the banking community. I mean, I think you gotta say that it works. It has worked. I mean, they clearly maintain control over a vast portion of payments activity and the growth rate there. That’s a pretty high rate at that volume already. So chalk one up for the banks as a really successful endeavor, I mean, looking at it already at its mature state and maintaining that kind of growth rate. Yeah. Seems like we can declare it as an endeavor, a success.

Rick Morgan   

We were just about to declare a winner in terms of Zelle and Venmo. I think that it’s very obvious that Zelle has done its job, as you’re saying, in terms of, you know, keeping that payments in the bank infrastructure. Venmo is still growing too. So it’s hard to say. It doesn’t seem like it’s necessarily stopped them from doing its thing. The interesting thing with Venmo, and we talk about this all the time is monetizing it and making it more than just a cool tool to send money. So the real thing to keep an eye on for Venmo is okay, you have all this payments volume, can you translate that to revenue and profit through, you know, paying merchants through Venmo, the Venmo debit card, the new Venmo credit card, these QR codes and just trying to make it more than just a p2p payments network. And that’s really what a lot of people are keeping their eyes on right now.

JJ Hornblass 

Yeah, I guess I guess the example for the venture that has really succeeded in doing that is Ant Financial in China. Bringing the conversation to a full circle related to its failed IPO. What is, other than perhaps being able to identify a new president of the United States, what else is going on next week?

Bianca Chan 

Well, we have our Banking Automation Summit, of course, which I hope all of our listeners will attend. It’s on Monday and Tuesday, we’ve got an amazing slate of speakers to talk about, you know, what’s new in automation and what we’ve learned from the pandemic in terms of automation and financial services.

JJ Hornblass 

Yeah, we’ve done a survey even to gauge automation get some data points on the degree of automation in banking today. So that’s out in the wild collecting data right now and certainly looking forward to next week, BankingAutomationSummit.com is the website. We hope you’ll join us. And, and of course, rate us on your podcast platform, whichever that may be, and be sure to visit us at finainews.com we’d love to see you online. As always, thank you so much for joining us. Thank you to Rick and Bianca. We’ll see you next time.