Courtesy of John Reosti, American Banker
In an effort aimed at funneling more capital to underserved borrowers, the Small Business Administration will eliminate a four-decade-old policy that set strict limits on the number of nondepository lenders authorized to participate in its flagship 7(a) loan guarantee program.
Under a rule that takes effect May 12, SBA is ending the moratorium that capped the number of small-business lending companies permitted to participate in 7(a) at 14. The agency has pledged to ensure approvals of new SBLCs are in line with its oversight capacity, so initially it is opening the door for just three additional nondepository lenders. But with the moratorium, which had been in effect since January 1982, out of the way, there is nothing to prevent SBA from gradually increasing that number as it upgrades its supervisory infrastructure.
The move comes despite concerns by banks, credit unions and prominent lawmakers that SBA might be buying trouble by adopting a policy that could result in many prospective new SBLC licenses being issued to fintechs, a group some have blamed for a disproportionate share of the fraud that marred the reputation of the Paycheck Protection Program.
In a statement Wednesday, the day the new rule was unveiled, American Bankers Association President and CEO Rob Nichols urged Congress to “closely examine SBA’s decision, particularly in light of … significant fraud linked to loans originated by fintech firms during the SBA’s Paycheck Protection Program.”
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Courtesy of Anna Hrushka, Banking Dive
Atlanta-based Greenlight is making its kid-focused banking services available to traditional financial institutions, the fintech announced on Wednesday.
The new partnership program, called Greenlight for Banks, allows banks and credit unions to offer the fintech’s suite of banking and education products to their customers through a co-branded landing page and app.
Over half a dozen firms, including Morgan Stanley, WaFd Bank and Community Financial Credit Union have partnered with Greenlight to offer the fintech’s services to their customers, Matt Wolf, Greenlight’s senior vice president of business development said.
Greenlight is actively involved in discussions with over 100 financial institutions, he added.
“In those conversations with financial institutions, we found that many don’t have the expertise or resources to create a compelling digital banking experience for the next generation,” Wolf said. “We’ve designed something that really helps financial institutions, seamlessly integrate family banking into their own ecosystems.”
Greenlight, which was co-founded by Tim Sheehan and Johnson Cook, launched a debit card for kids in 2017.
The fintech has since expanded its offerings to include savings and investing for children, while allowing parents to automate allowances and supervise their dependents’ money management.
In January, Greenlight launched a financial literacy game called Level Up, which banks and credit unions will also be able to make available to their own customers through Greenlight for Banks.
Lenders who partner with Greenlight have the option to hold the deposits gathered by the fintech, or allow them to be held by Greenlight’s partner bank, Community Federal Savings Bank, which issues the Greenlight debit card.
While banks are eager to launch products that reach the next generation of customers, bank accounts geared toward children typically don’t have high balances, meaning, they won’t be large deposit generators for banks, Wolf said.
“A couple transactions a month is probably not going to really rise to the top of their technology roadmap and prioritization,” Wolf said.
But offering services targeted toward kids and their parents allows a bank or credit union to create deep and potentially long-lasting relationships, Wolf added.
Jan. 6, 2023 — The past year, as the fintech industry is acutely aware, has not been without its challenges. From the continued COVID-19 global pandemic to whispers of a looming recession, and with mass layoffs to follow, the fintech industry has faced incredible uncertainty.
Future of Fintech
As we look ahead to 2023, we can’t help but anticipate the disruption and breakthrough that’s to follow such great challenges. Innovation will remain a core business driver, but so too will conventional business best practices. There are three core products and services to watch in the year ahead as businesses look to remain competitive in a challenging economic environment: the expansion of Platform as a Service (PaaS), credit-building tools and resources, and customer-first business operations.
Platform as a Service (PaaS) Is Growing and Only Getting Bigger with Fintech
Over the course of the last year, Anything as a Service (XaaS)—the general category of services related to cloud computing, remote access, and any sort of IT function—has continued to expand; and with no signs of slowing. PaaS is no different and has seen incredible growth opportunities, particularly among Integrated Software Vendors (ISVs), Independent Sales Organizations (ISOs), financial platforms, and payment companies. In fact, by 2026, the global PaaS market is expected to be worth an estimated $164.3B, growing at a CAGR of 19.6 percent.
Companies across industries are now facing pressures to transform and re-evaluate legacy payment processes in order to keep pace with competitors and the change of payments innovation. For ISVs and ISOs, and other financial product companies, managing the payments process can often be challenging and cumbersome, and it isn’t easy to navigate the increasing challenges of today’s financial ecosystem. With integrated payment solutions, ISVs are empowered to provide merchants with an improved user experience with consolidated processes and enhanced security. PaaS is not only benefiting the wide-range of fintech businesses currently looking to transition to a more modern cloud computing architecture, but it also improves the end-user experience as it allows these companies to meet the more unique and differentiated needs of their customers.
As we look ahead to the new year, PaaS will be an important area of growth opportunity across fintech, particularly as businesses look to keep costs low, weather global economic challenges, and develop new solutions quickly.
The Emergence of Credit Building Tools and Cash Flow Solutions in the Midst of Economic Downturn
With ongoing news of a looming economic recession, cash flow management solutions have become a growing priority among customers. In uncertain times, understanding where capital is going is more important than ever.
As we’ve seen across industries, businesses have already begun tightening budgets and prioritizing cash on hand. We expect this trend to continue, and with it, an increased prioritization of credit building tools and cash flow management solutions across businesses to empower secure and informed decisions to weather economic headwinds. The fintech leaders that are helping customers to reconcile and manage expenses efficiently will be the ones to differentiate among the noise. Business critical IT decision-making resources will likely be spared from budget cuts in the new year.
Customer Centricity in the New Year: Providing Superior Experiences Will Win the Challenge of Choice
Where PaaS and credit building resources prioritize innovation, above all else, customer service – although nothing new or groundbreaking – remains of utmost importance for businesses today. And with new fintech darlings emerging at breakneck speed, the CX-led businesses will be the ones to succeed in today’s competitive environment.
Although a modern payments platform is critical when processing payments, only relying on the technology comes with disadvantages. Excellent customer service is no longer defined by a 24/7 chatbot support but rather by industry expertise, coupled with innovative technology that is flexible and can be adapted to solve complex payments problems. Humanizing the customer interaction and working alongside the customer as they’re navigating current environmental challenges is crucial to not only improve the overall customer experience but also increase customer retention.
For businesses looking to grow their market share in 2023, the ones who will beat out the competition are the ones that are keeping the customer in mind every step of the way, through curated solutions and customized processes.
Courtesy of Craig Gass, Payments Journal
It says users in the United States can expect digital asset services to come in the future.
A subsidiary of the Huobi cryptocurrency exchange called HBIT Inc has received its Money Services Business (MSB) license from the United States Financial Crimes Enforcement Network (FinCEN).
The Seychelles based Huobi said on Tuesday that the license creates a foundation for it to carry out crypto-related business in the U.S. in the future, as part of its strategic goals of “globalization and compliance.” The exchange is a major player, with more than $1 billion in volume in the past 24 hours, according to CoinGecko.
Before the great crypto crackdown by Chinese authorities, most Huobi users came from China, but according to the latest figures from Statista, most users in February 2022 originated from Russia and Ukraine.
The MSB license allows Huobi’s subsidiary to transmit money and operate as a fiat currency exchange, a required step by U.S. regulators to ensure FinCEN can monitor financial crimes such as money laundering.
However, it does not allow it to provide crypto-exchange services — which would require a money transmitter license. It says in the future, it expects to provide U.S. users with a compliant digital asset service.
Huobi said its subsidiaries in Hong Kong have also received asset management and securities advising licenses from the country’s Securities and Futures Commission.
The subsidiaries are also in the process of applying for a license to provide automated trading services and securities trading to become a fully compliant crypto-exchange in Hong Kong.
Huobi has been on a streak of licensing wins.
On June 21, the exchange won licenses in New Zealand and the United Arab Emirates. The latter was an Innovation License which, while not a trading license, allows it to access the local tech industry and get special tax treatment.
At the time, Huobi Group chief financial officer Lily Zhang told Cointelegraph it plans to receive its license to offer its full suite of crypto exchange services under Dubai’s Virtual Assets Regulatory Authority (VARA).
It hasn’t been all good news though, with the exchange’s Thai license revoked on June 16 after it reportedly failed to comply with local regulations. There are also rumors of significant staff layoffs and that its founder might be looking to exit the business.
Hong Kong-based crypto reporter Colin Wu reported on June 28 that Huboi intended to lay off up to 30% of its staff, with a later update on Saturday reporting rumors that Huboi founder Li Lin is looking to sell his 50% stake.