Santander Enters the Ring, FinTech Charter Roadblock, Recession Checklist

By Tito Donis

October 27, 2019

Greetings,

Thousands of FinTech leaders are gathering for Money 2020 this Sunday thru Wednesday. If you’d like to get together, please email us.

We highlighted the Fed interventions in the repo market in the last few weeks. The interventions, unusual for a slow growth steady-as-she-goes economic environment, are raising questions for risk managers: “what are the risks underneath the surface that we’re missing?” The NY Fed has increased permanent and temporary repo operation offerings from $75 billion to $120 billion and saw strong demand for its offerings.

Below is a snapshot from a slide PeerIQ shared at the U.S. Installment Lending Roundtable conference in NYC, a closed-door group of CxO leaders representing the nation’s largest banks and non-bank lenders. PeerIQ customers can ping their client coverage for the full deck.

Recession Checklist – Indicators Mixed

On the regulatory front, The Fed and FDIC question if agencies are assigning bank ratings consistent with the Camels System. FDIC Chairwoman, Jelena McWilliams, stated that reviewing Camels is one of her top priorities as Chair.

The OCC FinTech charter experienced a major setback this week. Federal U.S. District Court Judge, Victor Marrero, ruled that the OCC lacked legal power to grant a bank charter to a non-bank entity that is not eligible for deposit insurance. The judged cited the “business of banking clause” in the National Bank Act which states, “the business of banking requires that only firms that take deposits can receive a national bank charter.” The OCC has indicated it will appeal the decision.

In industry news, Santander Bank has announced plans to offer digital banking services sporting 1.9% deposit rates. Santander will aim to create a new online portal with better money market rates than Wall Street banks – a not so subtle dig at Marcus.

In financing news, Finitive, led by CEO Jon Barlow, closed $2 million in venture debt round with Silicon Valley Bank. Finitive provides institutional investors with alternative lending investments. Finitive will use the proceeds to further invest in its technology platform, which brings efficiency to investing and raising capital in the alternative lending sector.

OnDeck has partnered with Investors Bank. Investors Bank plans to use OnDeck’s digital loan origination platform to increase its small business lending program in selected areas of its banking network. The alliance with OnDeck will allow Investors Bank’s small business customers to complete an online application in minutes, using desktop or mobile devices. If customers are approved, they can receive funding from Investors Bank in one business day.

PeerIQ Conferences:

PeerIQ will be at Money 2020 Oct 27th to Oct 29th. Reach out if you’d like to connect!

Industry News:

Fed Boosts Amount of Liquidity Offered to Financial System (Wall Street Journal, 10/23/2019) Fed increases temporary repo operation offerings to $120 billion.
Treasury Yields Steady Amid US-China Trade Optimism (CNBC, 10/22/2019) Treasury rates slightly decline as investors monitor economic data and Treasury auctions.
Housing Market Stalls in September (Wall Street Journal, 10/24/2019) The National Association of Realtors states that U.S. home sales fell 2.2% in September.
Mortgage Rates Forecast for November 2019 (Themortagereports.com, 10/18/2019) Fed rate cuts might impact mortgage rates going forward.
The U.S. May Finally Join the Global Negative Interest-Rate Club (Bloomberg, 10/22/2019) If the Fed continues to cut rates and restarts quantitative easing, negative yields could become a reality.
Fed, FDIC Will Explore Changes to Camels Rating System (American Banker, 10/18/2019) The Fed and FDIC question if agencies are assigning bank ratings consistent with the Camels System.
Judge Rules OCC Unable to Issue Fintech Charters (Lend Academy, 10/22/2019) OCC FinTech Charter denied due to a clause in the National Bank Act.
Santander Rolls Out U.S. Digital Deposits to Rival Goldman (PYMNTS, 10/21/2019) Santander takes on Marcus with new online deposit platform that offers 1.9% deposit rates.
Digital Lending Platform Roostify Plots Expansion With New Investment from Santander (Housingwire.com, 10/22/2019) FinTech startup that powers JPMorgan Chase and TD Bank receives funding from Santander.
Finitive Closes $2 Million Venture Debt Round With Silicon Valley Bank; Brian Madocks, CEO of eOriginal, Joins Board of Advisors (PRNewswire, 10/21/2019) Finitive, a FinTech company that provides institutional investors with alternative lending investments, closes $2 million in venture debt round.
Investors Bank Selects ODX Platform to Begin Digitizing Small Business Lending (Yahoo Finance, October 21, 2019) Investors Bank teams up with OnDeck, with plans to use its platform to improve their loan application process.

Lighter Fare:

Micromobility Startup Tortoise Comes Out of Stealth (Morningbrew.com, 10/23/2019) San Francisco-based startup, Tortoise, will begin testing their remote-operated scooters.