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The Green Finance Podcast Ep. 3: Banks’ role and responsibility in the climate crisis with Chris Skinner

In the third episode of the Green Finance Podcast, host Iulia Ciutina is joined by Chris Skinner, a financial technology expert, global commentator, bestselling author of multiple books, and owner of the website The Finanser.

Chris talks about banks and their role in the climate crisis — how big banks historically supported the global fossil fuel industry through massive amounts of funding, and are now being pressured to change.

Listen/read more

DataDay Conference 2022: All session videos

On June 21, 2022, we convened Tearsheet’s DataDay Conference, the premiere event in the financial services industry that focuses on financial data and the ecosystems currently being built by data aggregators, banks, payment firms, fintechs, and alternative sources of data used for financial decisioning.

We learned about the latest trends in the industry, growth challenges and opportunities for new and existing players, and met some of the top professionals making it all happen.

These videos are available for viewing for 7 days, after which they’ll be made exclusive to members of our Outlier program. You can sign up to access all our content here.

Watch videos

The latest briefing

Green Finance Briefing: Greenwashing on Wall Street, and climate tech stocks outperforming the market

Regulators are cracking down on misleading ESG claims at big banks, signaling that they’re paying close attention to the wave of greenwashing happening in finance.

Goldman Sachs is the latest target of an SEC investigation, following the greenwashing probes into BNY Mellon and DWS earlier this year.

ESG is the latest fashion trend to take over Wall Street – ‘green’ products are in this season, and many banks have responded to the increasing demand by offering ‘sustainable’ investments.

Read more (exclusive to Outlier members)

Just look at the charts

1. How real-time payments are going global

Source: Thunes

2. The future of fintech

Source: Sanjeev Kumar

Today’s stories

Too late for damage control?
After Brex’s announcement to cut off SMBs caused an uproar, founder and co-CEO Pedro Franceschi expressed regret over the “poor job explaining this decision” (TechCrunch)

Raisin Bank enters the payments space with new acquisition
German BaaS player Raisin Bank has agreed to buy a Bankhaus August Lenz unit, which will allow it to offer electronic payment transactions as well as cash solutions to partners and customers (Finextra)

Glia acquires Finn AI to bolster virtual offerings
Digital customer service firm Glia is set to acquire conversational AI technology company Finn AI — the agreement will integrate Finn AI’s conversational AI solutions into Glia’s platform (Finovate)

Klarna lashes out at “frankly irresponsible” Barclays research
Klarna is disputing new BNPL research published by Barclays with debt charity StepChange that warns many people could fall into financial peril due to unregulated financial products (PYMNTS)

Revolut rolls out Pay Later in Ireland
Revolut has picked Ireland as the first market to launch its BNPL product, which will see it go head to head with the likes of Klarna and Afterpay (Bloomberg)

Stay ahead of the game with Outlier — Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.

As financial apps and incumbent institutions further integrate, data and data sharing have become the building blocks of modern finance.

On June 21, 2022, we convened Tearsheet’s DataDay Conference, the premiere event in the financial services industry that focuses on financial data and the ecosystems currently being built by data aggregators, banks, payment firms, fintechs, and alternative sources of data used for financial decisioning.

We learned about the latest trends in the industry, growth challenges and opportunities for new and existing players, and met some of the top professionals making it all happen.

These videos are available for viewing for 7 days, after which they’ll be made exclusive to members of our Outlier program. You can sign up to access all our content here.

DataDay Conference 2022: Jessica Liberi, Head of Platform Technology, Fidelity Institutional

2022 has had no shortage of disruptions. In addition to the continued impacts of the COVID-19 pandemic, other factors such as cyber security threats and ongoing regulatory changes have accelerated financial institutions’ need to update, or even create, firmwide digital strategies for the first time. However, many wealth managers are finding the financial technology landscape increasingly complex. What are some ways they can approach the way they think about technology and best utilize it to help their clients? 

In this fireside chat, we’re joined by Jessica Liberi, head of platform technology at Fidelity Institutional to discuss how organizations can reimagine and invest in the future of fintech to help prepare for what’s next.

DataDay Conference 2022: Crystal Anderson, Vice President of Product Management, MX

Open finance and APIs are driving a new era of financial innovation that will fuel new use cases and business models for financial institutions and fintechs. 

In this fireside chat, we’re joined by Crystal Anderson, VP of product management at MX, to discuss the kind of real-life implications open finance has for consumers, how people interact with their finances, and how financial institutions can benefit from open finance and drive innovation vs leaving it to the latest fintech app.

DataDay Conference 2022: Dave McIninch, Head of Next Generation Solutions, Fiserv

Fiserv is a global fintech and payments company with solutions for banking, global commerce, merchant acquiring, billing and payments, and point-of-sale. 

In this fireside chat, we’re joined by Dave McIninch, head of next-generation solutions at Fiserv, to discuss how banks think about next-gen banking, embedded finance, and other opportunities to hunt for lower-cost deposits while driving demand for credit products.

DataDay Conference 2022: Lindsay Davis, Head of Markets, Atomic

What if the data hidden in your paystub could qualify you for a mortgage, car loan, or help get your tax returns to you faster? What if that’s just the beginning? Consumers should be able to easily share their own payroll data to improve their financial outcomes. However, connecting to the data is cumbersome, met with non-specialized solutions – and that is why the need for Atomic exists.

In this fireside chat, we’re joined by Lindsay Davis, head of markets at Atomic, to discuss how highly fragmented, fractured, and fundamentally broken the legacy banking system is, and how Atomic’s driving the industry forward through payroll data. 

DataDay Conference 2022: Jeff Kukesh, VP of Product, Akoya

Fintech is shifting from screen scraping to APIs as the primary way to access and receive consumer-permission financial data. Standards, such as OAuth for consumer authentication or Financial Data Exchange for data schemas, have helped to bring consistency and coordination into data aggregation and accelerated open finance in the US. 

Many of the remaining hurdles in the move to API-based data access stem from areas where the standards and best practices are still being set.

In this fireside chat, we’re joined by Jeff Kukesh, VP of product at Akoya, to discuss what still makes integrations so time-consuming and complex for data recipients.

DataDay Conference 2022: Billy Marsden, Co-founder & COO, Argyle

Employment and income data is owned by the individual, yet the majority of US workers are unaware that they have control over such data. What’s more, many companies sell employee data, typically without employees’ knowledge or permission, to data brokers that then package it to determine one’s worthiness of receiving financial services. 

Understanding the control one has over this data and how it is used in lending and banking decisions is integral for workers to gain access to the financial resources they need to support themselves or provide for their families. 

In this fireside chat, we’re joined by Billy Marsden, COO and co-founder at Argyle, to talk about the importance and impact of user-permission data. 

DataDay Conference 2022: Jean-Paul LaClair (Director, Financial Wellness and Open Banking, USAA), Aly Yarris (Universal Data Access, Plaid), Don Cardinal (Managing Director, FDX)

Don Cardinal, managing director at FDX moderates this insightful panel discussion, joined by Jean-Paul LaClair, director of financial wellness & open banking at USAA, who sheds light on what open banking means for customer access at USAA, and Aly Yarris, universal data access at Plaid, sharing what open finance means for Plaid and the community banks and credit unions it connects to.

DataDay Conference 2022: Nick Thomas, Executive Vice President – Global Open Finance Innovation, Finicity

The metaverse isn’t one place, but a multiplicity of digital worlds offered by different platforms, some of which blend with the real world. It is fast evolving with a great many potential use cases. Such an all-encompassing, powerful platform will create massive amounts of personal data — and raise significant questions about privacy, security, and ethics. Should there be an overarching set of rules that can then be nuanced as needed within their contexts, whether it be the metaverse, a region, or a single country?

In this fireside chat, we’re joined by Nick Thomas, EVP of global open finance innovation at Finicity, to discuss the opportunities and challenges in oversight and protection of financial data sharing.

DataDay Awards 2022

Tearsheet’s DataDay Awards is the industry’s top awards program, recognizing and celebrating the best data products, services, and brands powering the modern financial system. This year’s winners include Argyle, Mastercard, Plaid, and more.

Today we’re talking about banks and their role in the climate crisis. Big banks historically supported the global fossil fuel industry through massive amounts of funding, and now they’re being pressured to change.

But change happens slowly for banks – they don’t want any overnight actions. And yet, they can’t avoid change forever.

In the not-too-distant future, banks will be required to disclose the carbon footprint of their lending and investment operations. Regulators are already sending some pretty strong signals towards making the financial system more transparent and accountable.

Many of you might have seen the headlines over the past few weeks on the investigations that government authorities are conducting around greenwashing claims by some of the biggest banks in the world.

To help me unpack this, I’ve called Chris Skinner, a financial technology expert, global commentator, bestselling author of multiple books, and owner of the website The Finanser.

Chris is out with a new book, called Digital For Good. The book explores how financial systems influence the economy and the purpose of banks, and how they impact society and the planet.

Subscribe: Apple Podcasts I SoundCloud I Spotify I Google Podcasts

The following excerpts were edited for clarity.

What do you think is the banking and finance industry’s current role in the climate crisis?

Chris Skinner: Banking is at the heart of enabling the crisis, and the reason for that is that they provide all the funding for fossil fuel firms and fracking, and other things that are affecting the stability of planet Earth. And if they squeezed that funding, or withdrew that funding, then it would change behaviors and move a lot of the industries that are creating greenhouse gas emissions to actually being focused far more on renewables. Now, that is happening, but it’s just not happening fast enough. 

The issue is that banks make most of their profit from supporting those fossil fuel activities. By way of example, I think about 14% of all the loans of European banks go to firms that are creating issues for the climate, and that’s something that the banks have to understand and work out how they can still make profit whilst changing behaviors.

What do you think of this year’s activist shareholder proposals at major US banks requesting them to stop fossil fuel financing?

Chris Skinner: If shareholders put pressure on the leadership of the financial companies that they’re investing in, that has an effect. And there is, as you say, particularly in the pension fund and the asset management communities, pressure being put on financial firms to think more about ESG. There’s also equally the activist consumer who has less of an impact, except when they demonstrate outside banks, annual general meetings, which is something that’s quite common now, particularly outside the UK banks. 

The problem is that the banks then try to demonstrate that they are turning green, and doing a lot of sustainability and environmental projects. But when you lift the hood, you find that normally, that’s just PR and marketing. It’s not actually anything that’s making an impact on the bottom line and behaviors of their customers. 

I always go back to a Bloomberg interview I saw with Anna Botha, who’s the Executive Chair of Santander Group, and she was talking to Bloomberg about 18 months ago and said we’ve got to also understand that you can’t just switch off fossil fuel funding, just like that. What you have to do is create a plan for Net Zero 2050, ideally 2030, depending on your view, and get the movement to renewables far quicker through the financial system.

Do you think in the US the general sentiment is that there is a genuine interest from banking executives to move from being part of the problem to being part of the solution?

Chris Skinner: From a heart view, yes. From a head view? No. Because I mentioned greenwashing, and actually the US banks are the biggest culprit of greenwashing – from Blackrock through to JPMorgan Chase, the biggest funders of fossil fuels and greenhouse gas companies. It’s coming from the US banks, the top four, namely JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, and then behind them in Europe, HSBC, and Barclays Bank. 

The reason for that is, as I say, they’re making huge amounts of profit out of those investments and loans that support those industries. And so, there’s a real conflict. On the website, you’ll find loads of messages around their focus on sustainability and the environment. And yet, as I mentioned earlier, underneath the headline, they’re not doing anything at all.

Forgetting about all the marketing and PR, and just focusing on the reality of the situation, do you think it’s fair to draw a line and say that big banks are currently making the climate crisis worse?

Chris Skinner: I think I can safely say that. Since the Paris accord of 2015, something like $4.6 trillion through 2021 was poured into fossil fuel and fracking firms. But there is pressure coming through, and it’s not just from activist investors and activist consumers.

I spent the last 15 years talking about FinTech nonstop, which to me is just the integration of technology and finance. When I look at the FinTech community and when you talk to the challenger banks and the neobanks around the world, their agenda is all about financial inclusion about making the world and society a better place, focusing on offsetting the way in which your lifestyle through your money shows your behaviors, to encouraging consumers to behave better. 

How can we make the most out of this new mentality that the fintech industry is injecting into finance? What role does technology play here, for example, as most of the innovation in the space has been driven by technology?

Chris Skinner: Technology makes it really transparent as to how companies are behaving. A figure that struck me when I started investigating these ideas, which was five years ago, was that 71% of the global greenhouse gas emissions are produced mainly by just 100 large companies. 

Then you look at who’s behind those companies from the financial backing viewpoint – you can find out easily through the network now, because so much of it is transparent, thanks to search engines. For example, just a couple of years ago, Blackrock said that they were investing in sustainable projects, but when you actually looked at what that meant as a definition, 97% of their investments were going into non-sustainable projects, as discovered through investigations of various research companies. 

I always questioned such findings, because some of them are just scams and spams, and they’re not real. But regardless, when you see something that doesn’t look right, you can very quickly get the facts. It doesn’t take long; there’s lots of research for free out there, and you can act upon it. 

That’s where Extinction Rebellion and others are starting to step in to say they’re going to shine the light on what these guys are doing and make sure people are far more aware of that. This is really bad PR for the bank, but it’s a good way of actively protesting. And what’s interesting is, for example, Gail Bradbrook, who’s a co-founder of Extinction Rebellion – I regularly host her on my blog these days with a monthly column, because I want to have a voice heard, and at least have the conversation. And her latest blog that she wrote was about breaking the windows in Barclays Bank branches and headquarters. She said this is not a crime, because active protest, as long as you’re not damaging or killing people, is allowed. That’s what the suffragettes did a century ago to get the vote for women, and that’s what Extinction Rebellion are doing today.

What do you think the role of the government is when we talk about accountability and transparency?

Chris Skinner: The financial system and the government work hand in hand. Economies prosper if the financial system is effective and works and they fail if the financial system fails. Governments want finance to be successful and prosperous. At the same time, the financial system wants to have the government to support the way in which they’re behaving. 

An example of this is in Norway – I run a group called NSI, Nordic Future Innovation, and in Norway, there’s a huge movement towards sustainable transport and services. It’s the leader in Europe, in electric cars and renewables. And at the same time, their sovereign wealth fund makes all their money out of oil. The government is not going to shut down that revenue stream. And yet at the same time, their society wants to have an environmentally friendly future. That’s a big conflict. 

Capitalist societies have been driven so far by short-term profits, mostly focusing on returns for shareholders and willing to compromise on everything else. Do you think there’s going to be any change there? How do we change the economic system to include the environment?

Chris Skinner: Stakeholder capitalism was rising in the 2010s and culminated maybe in the business roundtable led by Jamie Dimon, the Chief Executive of JPMorgan Chase. He delivered a white paper talking about stakeholder capitalism in 2019, saying that the focus has to be not just to shareholders but also to the society and community. 

It’s a nice thing to say, but to deliver is much harder, because if you had things that would do good for society and the planet, but you have to deliver to the shareholders to maintain their support, then the model falls down. But I think it is changing, because I think a lot of the shareholders are going back to what you said before around investors, asset managers, pension funds, feeling that this is important. 

One of the things that happened in a meeting I chaired around this subject is that pension fund managers often said, I’m really worried I won’t have any money to pay a pension in the future, because of the way we are abusing the planet. And for a pension fund, that’s not a good thing to think about. So we need to change our ways now. 

I’ve been talking about climate in a financial context for almost 30 years, in terms of meetings and presentations that I’ve been listening to, and yet, we’re still caught in this terrible loop around shareholder capitalism. 

You argue in your book that banks need a higher purpose, and that there’s also a need for a stakeholder purpose that makes sense. So how do you think purpose can be translated into something more tangible and quantifiable?

Chris Skinner: When you look at some of the newer companies – Discovery Group from South Africa, Monzo, others I’ve interviewed, and I asked them about their purpose – they have a very clear purpose. For Discover Group, it’s around using wealth to make health. That’s how they came up with things like vitality, like a Fitbit. If you say that you go into the gym, they can actually monitor that through the connection to the Fitbit or whatever other health device you use, then your premiums are lowered. You may have lent the Fitbit to a friend, that’s another story, but it’s a great idea.

Monzo is about financial services that should be suitable for everybody. And they came up with a number of ideas, which include, for example, bank accounts for homeless people. You wouldn’t give a bank account to someone who had no fixed abode, but if they had a guardian, who guaranteed their account, you could do that. In fact, HSBC and others are now starting to come up with those ideas. 

I think the problem with the large financial institutions is that they’re 100, 200, 300 years old, and they’ve lost that sense of identity and purpose. Maybe the values were there with the founders, just as it is with these founders of new financial firms today, but then over time, it’s been lost and twisted. And it’s become purely around profit and bonus, rather than around society and the wellness of the planet. 

But I can say that change is on the agenda of the management. When I talk to any of these chief executives of the large financial firms, they say, Chris, we really understand the issues. It’s just that we can’t change a whole organization on our own with several hundreds or thousands of people overnight. They have to do overtime. And the real thing, going back to your regulatory viewpoint, is, can they do that in time? And specifically, can they find a purpose? That’s not just a piece of PR and marketing, but what do they truly believe in?

Greenwashing on Wall Street

Regulators are cracking down on misleading claims at big banks, signaling that they’re paying close attention to the wave of greenwashing happening in finance. Goldman Sachs is the latest target of an SEC investigation, following the greenwashing probes into BNY Mellon and DWS earlier this year. 

ESG is the latest fashion trend to take over Wall Street – ‘green’ products are in this season, and many banks responded to the increasing demand by offering ‘sustainable’ investments. 

I’ve argued before that ESG is currently more about the hype than actual value-aligned investing. Despite growing increasingly popular, the unregulated world of sustainable investments is not always what it’s cracked up to be.

Initially, the pressure was coming from institutional investors that were looking for more environmentally friendly ways of investing, according to financial regulation expert Amy Lynch, but that has now expanded and spun over into the retail sector. 

“It’s the hot new thing, and everyone’s trying to get in and profit off of it,” she said. 

But considering there are no rules, how did we get to greenwashing investigations?

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Tearsheet provides daily summaries of the top news stories and events, like this piece, in a nifty, neat, nicely-packaged daily email. Stay informed. Subscribe here.

‘I actually have three notebooks in front of me’: A day in the life of Crystal Anderson, vp of product at MX

MX is a Utah-based financial data platform. As VP of product, Crystal Anderson’s role involves all things product, from organization to management, to design. 

Anderson has been with MX for about a year now and has been in the financial industry for over twenty years, with almost all of that time spent in product management or product development.

But it’s not finance that kicked off Anderson’s passion for product, but rather a hunting and fishing TV show, where she was working as an editor at the time. 

As one of the central figures in all things product at MX, Crystal Anderson is no stranger to a busy schedule. But her passion for writing and her love of sports help keep her day centered. Here’s how. 

Read more

Introducing Tearsheet’s inaugural Banking on the Planet Conference

Where banks lend, money matters. So do the consequences of those lending models. The rising sentiment in the global conversation is that banks must assume accountability for the financial industry’s impact on the environment.

How do we move from greenwashing to making a difference?

Tearsheet’s inaugural Banking on the Planet Conference brings together leaders from the banks that set out to make a difference, and the fintechs and technology providers enabling those promises.

Join us virtually at the Banking on the Planet Conference 2022 on July 26th for a day of critical dialogue on the responsibility bestowed upon the financial industry, and the players rising to the challenge.

Get your ticket

The latest briefing

Payments Briefing: Is the ‘Apple Pay Later’ hype warranted?

At this year’s Worldwide Developers Conference, Apple announced a major update called Apple Pay Later, scheduled for launch with iOS 16 this September, which will allow US users to split up their Apple Pay purchases into four equal installments spread over six weeks, without interest or late fees.

Apple Pay Later runs on the Mastercard network, and can be used anywhere Apple Pay is accepted online or in-app. However, the service will not be available for point-of-sale transactions.

The news comes at an uncertain time for the BNPL industry, owing to slow economic growth, rising inflation, and higher interest rates. The Apple Pay Later news has attracted a lot of hype in the media and across the tech world but how much of it is justified?

Read more (exclusive to Outlier members)

Just look at the charts

1. The rise of open banking

Source: Mastercard

2. Worldwide crypto owners by country

Source: Sanjeev Kumar

Today’s stories

Mastercard has released an album featuring its ‘sonic brand’
Mastercard has dropped an album available on Spotify — the Priceless album — featuring 10 original songs from 10 emerging artists from around the world, each incorporating the melody of Mastercard’s “sonic brand sound” (Finextra)

Citi partners with Metaco for digital asset custody
Citibank has selected Swiss cryptocurrency custody firm Metaco to develop the bank’s digital assets safekeeping capabilities — Citi, which holds about $27 trillion assets under custody, intends to fully integrate Metaco’s “Harmonize” crypto custody platform (CoinDesk)

Shopify eyes the untapped market of B2B sales
Shopify is setting its sights on a “huge untapped market” for business-to-business commerce, as it introduces new tools in an attempt to fend off competition from Amazon and revive its fortunes after a bruising stock sell-off — the push would unlock opportunities “multiple times” bigger than its existing model (FT)

Truist unveils banking tech center in Charlotte
Truist Bank is looking to fuse tech and finance with a new 100,000-square-foot banking Innovation and Technology Center that debuted Tuesday at its headquarters in uptown Charlotte — the two-football-field sized facility will serve as a research lab and collaboration hub for engineers, designers, and customers to “build a better banking experience” (The Charlotte Observer)

JPMorgan reduces headcount in mortgage unit due to rising inflation
JPMorgan has started laying off employees in its mortgage business, as elevated inflation and rising mortgage rates slow the housing boom in the US — more than 1,000 employees will be affected and about half of them will be moved to different divisions within the bank (Reuters)

Stay ahead of the game with Outlier — Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.

MX is a Utah-based financial data platform. As vp of product, Crystal Anderson’s role involves all things product, from organization, to management, to design. 

Anderson has been with MX for about a year now, and has been in the financial industry for over twenty years, with almost all of that time spent in product management or product development.

But it’s not finance that kicked off Anderson’s passion for product, but rather a hunting and fishing TV show, where she was working as an editor at the time. The big ah-ha moment came when the owner of the show approached her about a new idea he had in mind concerning scent elimination – as in hiding your scent from the animals you’re hunting.

Until then, the main go-to for scent elimination involved spraying your clothes with urine. The idea was to use the new enzyme technology that was being developed to create a zero scent environment without having to rely on too many not-so-pleasant odors.

“He introduced me to this idea that there was actually a career where you can have a need that wasn’t being met, and that you could actually go create something to meet that need,” said Anderson. “And I was just blown away that it was actually a career that I could have.”

Fast forward around twenty years, and Anderson is working with product all day, every day. 

Needless to say, there’s a lot to get done. 

But an addiction to writing and a solid work structure helps Crystal see things crystal clear.

Here’s a day in her life:

Early morning: Reflecting on yesterday, revving up for today

I really try to be intentional about how I start my day. It just makes a huge difference.

For me, that means using the morning for either meditation, reading, or journaling – I journal quite a bit.

There are days, of course, where I just want to grab my coffee and sit and watch TV. But there’ve been maybe two or three times I’ve actually done that in the last ten months. 

Then, at around 6:30, I’ll wake my daughter up.

Like everyone, I’ve been working from home since March 2020. And I’ve actually come to love it. Before working from home, she and I were rushing through our mornings – basically giving her a granola bar and running out the door. And there were a lot of tears, because we were both in a hurry.

Today, though, I’ve really come to love our morning routine. It’s something that I will make sure that we maintain, because it just makes our days – my husband’s included – start off so much better. 

So now we start our day together at around 6:30 – she’ll get ready, brush her hair, get dressed and all those things. But now I get to make her breakfast every morning, which means she and I both get to start our day with a nutritious meal. 

It’s also our time that we get to spend together in the mornings before we get ready. It’s much more peaceful. I take her to school and then that’s when my day starts. 

Work: Switching gears and switching notebooks

So I have that hour in the morning which is my personal time, where I really try to make sure I’m not doing anything work related, and that I’m doing something for me to sort of fill up my cup.

But then I start my work with focus time, as well. At MX, we try to avoid meetings between 9 and 12. It gives everyone a chance to spend that time in a distraction free environment – whether it’s time for engineers to code, for designers to design, or for our product managers to do research and write vision documents. 

And so I spend my day the same way as my team does, which means I do that focus time in the morning. 

I will take meetings every once in a while, but the bulk of them tend to take place in the afternoon – or in my case a little later since I’m in Mountain Time.

As for the day’s tasks – I like to make a to-do list. 

To me personally, I know that I commit things to memory when I write them. It’s just the way that I learn. I don’t go back and read what I wrote very often. But what I find is that just the act of writing helps me remember. It’s also very soothing. I like to write with a very specific pen, for example.

And so I actually have three notebooks in front of me right now – I’ve got my personal journal, my to-do list notebook, and my regular notes notebook. 

I like to use what I write during my focus time to get ready for the day and really prepare myself for the afternoon meetings.

A sports lover’s approach to team building

My husband is a sports talk show radio host. So we are a big sports family – it just worked out that I found someone who also loves sports. 

Part of what I really love about it is the ceremony and the meaning around something that could otherwise be kind of benign. I mean the whole idea of hitting a ball and then running around an area would feel like a pretty meaningless activity if there weren’t ceremonies and tradition around it. But I just really love what it does for human connection. 

And if I reflect on it, I think that that’s probably how I approach team building and even my own life. We’re doing all these ceremonies and things, but it really only becomes meaningful when it’s about human connection. 

Evening – shutting off work, making way for family time 

One of the other great things about working from home is that when my daughter gets back at around 3:30, she’ll come in and say hi. I’m still working then, but I do feel like if she needs something or wants to come in and tell me about her day, I can take that time to be there for her. 

I do work for several more hours, but at around 6:30 or 7 I try to shut it down. And if there’s more than I need to do, I really try to do that after my husband and daughter go to bed. 

There are certainly nights that I have to work overtime, but for the most part, I really want to make sure that I’m reserving this period for family time. It’s very important to me. 

Our dinner is usually done right about when I’m getting off of work. So we’ll eat together, and then my daughter will read to us, or we’ll go outside and play soccer – she’s really into soccer. 

And, you know, that all sounds really beautiful, but I also just love to veg out and watch TV. I don’t like anything that’s too emotionally taxing. We just got around to catching up on ‘This is Us’ – and my husband was like, “Are we ever going to watch this?”

At this year’s Worldwide Developers Conference, Apple announced a major update called Apple Pay Later, scheduled for launch with iOS 16 this September, which will allow US users to split up their Apple Pay purchases into four equal installments spread over six weeks, without interest or late fees.

Apple Pay Later runs on the Mastercard network, and can be used anywhere Apple Pay is accepted online or in-app. However, the service will not be available for point-of-sale transactions.

This marks Apple’s long-awaited (some would say, long-feared) entry into the massive BNPL sector, and will see the tech giant take on comparable offerings from current leaders in the space like PayPal, Affirm, Afterpay, Klarna, and Sezzle.

As is the case with most announcements involving an Apple product or feature, the Apple Pay Later news has attracted a lot of hype in the media and across the tech world.

The news comes at an uncertain time for the BNPL industry, owing to slow economic growth, rising inflation, and higher interest rates. Klarna recently laid off 10% of its global workforce, citing the impending recession and the onset of war in Ukraine as primary reasons. The firm is reportedly discussing raising funds at a $15 billion valuation – substantially lower than its $46 billion valuation last June.

Last year, Klarna’s total losses doubled to reach $487 million. Other operators in the space have also been struggling to achieve profitability. Affirm reported net losses of around $430 million for the fiscal year ending in June 2021, while Afterpay’s annual losses jumped to $345 million last year. 

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Where banks lend, money matters. So do the consequences of those lending models. The rising sentiment in the global conversation is that banks must assume accountability for the financial industry’s impact on the environment.

In response, we’ve seen some banks starting to become more transparent in their lending portfolios, and a new sector of fintech rising in dedication to carbon offsetting. A new wave of startups has launched over the past few years targeting the intersection of climate risks, sustainability, ESG, investments, and banking. Some challenger banks, like Aspiration, have designed and marketed their products for the environmentally-conscious consumer, giving rise to an environmentally-infused ethos around banking. And many of the big banks have signed pledges committing to going carbon neutral. 

But how do we move from greenwashing to making a difference?

Tearsheet’s inaugural Banking on the Planet Conference brings together leaders from the banks set out to make a difference, and the fintechs and technology providers enabling those promises.

Join us virtually at the Banking on the Planet Conference 2022 on July 26th for a day of critical dialogue on the responsibility bestowed upon the financial industry, and the players rising to the challenge.

Get your ticket

This episode focuses on lending as a service – you’ve probably heard of everything as a service by now, and lending is no exception. 

However, lending is one of the trickiest lines of business in our industry, and it comes with many complexities and challenges, as well as opportunities and that’s why I’m talking to some really awesome and experienced folks in this area. We have Adam Huges, who’s the CEO of Amount, and Rohit Mittal, the chief executive of Stilt. 

Amount is a lending as a service platform, helping banks build simple digital lending experiences. The fintech is a spinoff of Avant, an early online consumer lending business, which launched Amount as its B2B service around seven years ago. 

Now its clients include HSBC, PNC, Barclays, and TD Bank, among other financial institutions collectively managing just over $3.1 trillion in US assets and servicing more than 50 million U.S. customers.

Meanwhile at Stilt, the fintech initially focused on lending to underserved communities, but has expanded to offer credit-building services to other companies. Stilt recently raised $114 million, fuelling its plans of expansion into B2B lending products, launching its lending as a service platform called Onbo, where fintechs can build credit products without a bank sponsor while making sure they stay compliant. 

Stilt is known for offering consumer credit focusing on immigrant communities, but you’re now entering the lending as a service space with the launch of Onbo. What were some of the factors that drove that expansion?

Rohit Mittal:  We started as a lending company, we built a lot of infrastructure in house that we were using to lend only to our customers. And during this time, I was talking to a lot of founders, helping them all launch credit products on their own, based on our experience of building Stilt. At some point, we realized we can actually serve all of these founders through the infrastructure that we have built. We signed up our first clients even before we started working on the product. Since then, we built API’s on top of our infrastructure, through which licenses, compliance management system, payment system, credit reporting, underwriting debt, capital – all of those things are now abstracted away.

Amount was originally in the lending as a service space, offering account opening loan origination and buy now pay later solutions in consumer lines. Earlier this year, it announced the acquisition of Linear, a small business loan and account origination platform. What were some of the factors that drove that acquisition? How did Linear complement Amount?

Adam Hughes: We actually started as a B2C lending platform under the name Avant. In 2016 we recognized the technology we had built around digital lending, digital originations, account management, fraud prevention, which is lightyears ahead of every bank that we are interacting with, and saw an opportunity to spin out our technology and start a separate business where we would be white labeling that technology to really digitize the branch experience for banks, as well as help them in buy now pay later and embedded finance. We did that in 2020, and we’ve had a lot of success, we’ve raised significant private capital, and we have 20 plus bank partnerships today.

We started on the consumer and embedded finance side, and after our last capital raise, we had always said the use of proceeds was going to be around M&A, and talking to our bank partners and talking to our channel partners like FIS, we kept coming back to small business as the huge value add for our clients. And from our perspective, the clear leader in the SaaS small business lending space was Linear. We were thrilled to acquire the company, bringing its CEO Sam Graziano and his fantastic team to Amount has been awesome.

What are the challenges banks are facing on their digital journeys? What is driving the demand for lending as a service products?

Adam Hughes:  A couple of reasons why more and more banks are much more open to partnerships than in years past. 

Number one – there’s more competition from them today, there’s certainly been a rise of not only fintechs, but also challenger banks that are very focused on providing better experiences and better banking products to banks’ customers, so banks are starting to lose customers to those fintechs and to those challenger banks.

Number two – consumers’ digital expectations have significantly increased. When we can do everything from our mobile phone, customers want that same experience for their basic banking experiences. And when they don’t get those experiences, they’re gonna choose other alternatives. Banks have recognized that, and are quickly trying to catch up to make sure that they are keeping their best customers and best merchant partners. 

The reality is that many banks have technology that’s been cobbled together through years of acquisitions, and it’s just really hard to do. And by partnering with an out of the box platform like Amount, they’re gonna be able to provide their customers and their merchant partners with best in class products and experiences in a matter of months, and that’s extremely valuable for them. Not only can they provide this product quickly, but also innovate and test as well to make sure that they’re staying ahead of those consumer preferences on a go forward basis.

Rohit Mittal: We see demand more from fintech and non-fintech companies wanting to launch credit products. All of these companies actually have had to work with a bank sponsor to really lend money. Everyone goes to all the usual suspects, they try to set up a partnership, and it takes about 12 months to go live with the lending program, both on the consumer or the commercial side. So what we do is we reduce that 12 month time window to eight to 12 weeks, even shorter for most companies. The fastest we can take someone live is two to four weeks.

If you want to launch a credit builder product, you can come to us because we have our own licenses with our loan management system and payment systems and so a client doesn’t have to go to different vendors. 

What does it take to form a solid partnership that works?

Adam Hughes: What it comes down to is execution – banks are going to partner with a technology provider that can provide that elite experience product quickly. If you are a startup looking to get into the space, expectations are really, really high. Not only do you need to deliver the experience, you need to deliver that in a compliant fashion, that’s going to make sure that you hit the mark for everything that the bank’s procurement and compliance departments are going to demand. 

The good thing is that if you can execute and really hit the bar for that bank partner, you can land and expand that relationship, because that bank is going to logically look to you to do more. If you can deliver at a certain standard, you’re going to win a lot of believers and champions within that bank. That’s always number one. 

Number two, you’re really being an innovation partner for the bank. Being able to take our experience as a disruptor in the space and pair it with great best in class recommendations to the retail lending leader at the bank, we also find that to be extremely valuable. Banks really value that we’re not only providing them this out of the box technology, but we’re also holding their hand so they can grow a large profitable portfolio.

Rohit Mittal: I think one of the main things that helps form a solid partnership is compliance infrastructure. At Onbo, we are always trying to say yes to new and innovative programs, but that comes with a level of compliance oversight. 

As we see clients open towards being compliant, that actually forms a solid foundation for more programs in the future, and scaling of existing programs pretty quickly. We collaborate with them and help them innovate on new programs, and if you set up a solid compliance foundation, everything else takes care of itself. 

How do you balance growth with compliance risk?

Rohit Mittal: In our case, compliance risk definitely increases as the company grows. All the regulations that are meant to prevent harm to consumers are actually coded into the system – any one individual cannot take an action that actually ends up harming the consumer. 

We have actually built a lot of technology around managing compliance, both in terms of oversight, and in terms of not leaving room for individuals or employees to make mistakes as the programs are scaling, and that becomes very important. 

The second part that we really focus on is making sure we are underwriting consistently and compliantly as we scale. Every company starts to cut a little bit corners as they scale in terms of underwriting and managing risk, but we have made all of those things a core part of the infrastructure. So as companies on our platform scale, they can be confident that everything will be compliant.

Adam Hughes: Helping a partner maintain compliance is certainly a huge part of the job. We built the platform in such a way that we have a tremendous amount of confidence in everything from rates and terms, the way that you display contracts to a customer or small business, reporting to credit bureaus, etc – that it’s all trackable and auditable. 

We’ve gotten to a place where at any time our bank partners can take a look and walk away with a lot of confidence that we’re really checking the box for them around everything they need to stay compliant as they grow a digital portfolio.

What are some of the biggest challenges of running a lending as a service platform?

Adam Hughes: For us, it’s really about staying focused, because there’s so much opportunity not only here in the US, but also around the globe, helping banks digitize and roll out better products and experiences to customers around the world. 

We’re constantly getting opportunities coming in through our direct sales channels or channel partnerships, so we really try to stay disciplined around what we call our big three – where we put our bets, our time, and our resources to make sure that we are building these elite products, that our clients are extremely happy, and that we’re not taking on too much that we’re losing that focus.

Rohit Mittal: I just want to explicitly say doing lending is hard. It’s complex. It’s super regulated, I think it’s one of the most compliant, most heavily regulated fintech products to launch across, say debit cards and investment products and other things. Lending is the most complex

Let’s say you’re doing an unsecured personal loan – if you charge less than 36%, then you are probably okay. If you charge 36.1%, you may not be okay. And there is no way for people to know what that line is. 

We abstract away all that complexity, you’re basically getting many years of constant compliance, and regulatory oversight through just one set of API’s. And building that is extremely challenging, but that’s also the way the industry is going to innovate. So as we take on that responsibility of dealing with all the complexities of the lending world, our clients can choose to focus on their customers and innovate for them. 

Do you see the ‘platformization’ of the traditional lending industry as a natural evolutionary step in this new digital mobile economy?

Rohit Mittal: I think fintechs started with integrating payments, then came debit cards, and the next step in my mind is credit products. Payments is a low margin, high volume business – credit is the largest revenue driver of all of these products. And as companies now try to increase revenues for the customers that they have acquired over the past decade and try to monetize them, credit is the most obvious way to move forward.

Launching lending products is tough – you generally need a 10 to 15 person team working on it for a year to get any material lending product out in the market. Nobody wants to wait that long, nobody wants to put that many resources behind it, so companies will look for partners. 

Adam Hughes: This trend that we’re seeing, we don’t think it’s slowing down anytime soon. By being more open to a partnership with a platform, you don’t need to build it in-house.

Banks are also recognizing and waking up to the fact that they can compete and win in this space. Banks have massive advantages. They have cost of capital advantages, massive customer bases that have been with them for decades in certain cases. There’s certainly a massive trust factor that customers and small businesses have with their banks. 

They also have a treasure trove of data and so they can be really innovative and really understand who that customer or small business is. Pairing the banks with the right technology, as they’re bringing to the table this data advantage, their deep experience around compliance and risk assessment –  that’s a marriage that can certainly win into the space. And I think banks are recognizing that as well.

Microsoft announced that it’s shutting down its Money in Excel offering by mid-2023. Excel, however, remains a people’s favorite when it comes to managing money. So, it makes sense that Microsoft is merely handing over the baton — to an outside developer on a mission to make spreadsheets fitter for personal and business money management. Say hello to Tiller, an automated personal finance service built on Microsoft Excel and Google Sheets, which aims to combine the ease of an app with the power of spreadsheets.

Tiller’s product is already in the market and has garnered much popularity. Microsoft has officially started recommending its services to all users of Money in Excel as a replacement, in addition to subscribers of Microsoft 365.

“After careful consideration, we’ve decided to end support for Money in Excel for M365 Personal and Family subscribers, effective June 30, 2023,” a Microsoft spokesperson told Tearsheet. “We understand that managing money is important to our customers, so we’ve partnered with Tiller to offer a 60-day free trial of their personal finance spreadsheet service.”

What does Tiller do?

Simply put, Tiller makes it easy for you to review all your finances in one place – a spreadsheet – without having to do any manual input. The service directly connects your spreadsheet of choice to your financial accounts — the platform connects with around 21,000 FIs — from where you can securely import your transaction data into your workbook and sort it under customizable transaction categories. By eliminating manual data entry, CSV exports/imports, and the need to log into multiple bank accounts, the company claims it makes managing money in a spreadsheet 10x faster. 

Consumers can thus track their budget, expenses, debt payoff, and net worth with a prebuilt Foundation Template. And since the service is built directly into Google Sheets and Excel, it is pretty flexible. There are a variety of ways in which a user may decide to build custom dashboards and workflows that extend the Foundation Template to support specific customer needs. You can set up daily email updates showing your account balances and cleared transactions, from up to five automated workbooks. With such a summary sent directly via email, users may not even need to open their spreadsheets to see where they stand.

Tiller’s service costs $79 per year. The firm does not sell any consumer data or show ads in-product, creating revenue solely through customer subscriptions. With over 49,000 installs in Google Workspace Marketplace, the service currently has a 4.7-star rating.

“Most of our new customers find Tiller when they become frustrated with whatever personal finance app or service they were originally using,” Edward Shepard, marketing lead at Tiller, told Tearsheet. “Their frustrations are generally about lack of flexibility, inaccurate transaction categories, too many ads, or poor data feeds.”

Tiller currently only exists in the US market. A large cohort of their customers so far are technology and finance professionals. Through customer interviews and reviews, the firm learned that its users range from the top 1% of net worth to people rebuilding their financial lives or just starting out — showing some diversity in its customer base.

Spreadsheets and personal financial management

A natural question that may arise about Tiller’s offering is, why did they choose to build the product onto existing spreadsheets, and not, say, make a new platform altogether?

When the company originally set out to create its product, the team did think it would be making another smartphone app. The idea was born out of a desire to provide people with a greater sense of peace, confidence, and control in their financial lives. This was especially acute as the young team itself was starting families and managing busy careers. They found all the existing personal finance apps and tools to be inflexible, buggy, filled with ads, or clunky. But after doing some market research, the team landed upon three key insights that would eventually move them away from creating an app: 

• Regardless of their net worth, debt, or income, people who felt most financially confident shared one trait: they were all highly engaged with their finances. 

• Most of these people preferred spreadsheets for managing their money. 

• The #1 reason they preferred spreadsheets was flexibility. Indeed, because they had perfectly customized their spreadsheets to their financial needs and goals, they were unlikely to ever switch to another app or tool.

“Upon reflection, it wasn’t surprising that the most financially engaged people used spreadsheets to manage their money – we always ended up back in our spreadsheets as well,” Shepard said. 

So, the firm changed gears and restarted from the conclusion that spreadsheets are the most customizable tool for understanding financial data. This is especially true for modern cloud-based spreadsheets like Google Sheets and Excel, with their built-in reports, visualizations, and real-time collaboration. The team then set out to make spreadsheets faster, easier, and more accurate for everyday financial tracking and planning.  

The first step was finding a way to automate data entry and eliminate CSV exports/imports. The early version of Tiller simply connected multiple banks directly to Google Sheets with a daily feed of transactions and balances. The firm then teamed up with personal finance experts to design several automated budget templates — all still in Google Sheets. These templates and partnerships helped the product gain traction, according to Shepard.

“However, we soon realized our pre-built templates were a bit of an impediment for customers to leverage the true flexibility of spreadsheets. So we separated the bank feeds from the templates and launched Tiller Money Feeds.”

Tiller Feed is the feature that connects directly to a user’s bank and shows them their spending, income, and account balances live as a feed.

The opportunity in spreadsheet-based financial management products

“In the startup space, there’s an idea that spreadsheets are your biggest competitors. We decided to build that concept into Tiller as a core strength,” Shepard said.

The company is obviously convinced of the opportunity in creating financial management tools directly onto spreadsheets. They find evidence for that in data that shows over a billion people use Google Sheets or Microsoft Excel, and spreadsheets are the single most popular tool for managing money in the US. Shepard quoted a poll from 2019, which found that of Americans who track their finances, 24 million use spreadsheets as their primary tool. Additionally, the company’s own polls suggest that spreadsheets are the most trusted tool for tracking money — people familiar with spreadsheets stick with them. 

Many of Tiller’s customers have spreadsheet budgets that started over a  decade ago. And unlike many services that pop up and then disappear, spreadsheets aren’t going anywhere.

Tiller has grown annually each year since it was founded, including through the pandemic and ensuing recession. As a premium product, there was a fear that they might see a bit of a slowdown in new signups in 2020, but that didn’t happen. What they have seen is a difference in how people use Tiller. In more challenging times, people use Tiller more for planning and closely tracking expenses.

Shepard reports the firm is seeing strong growth this year too, saying neither are there signs of a slowdown, nor of a dramatic rise in new customers. They have a number of product investments underway to continue to improve both their new Microsoft Excel service as well as their Google Sheets service. They’re also growing their Community — a feature the firm is quite proud of — as a home for customers to share ideas, answer questions and inspire each other with workflows and solutions. 

“Our partnership with Microsoft is also a defining focus of 2022, and with the help of Microsoft, we’re working to make Tiller a home for any Microsoft 365 consumer that wants to get a handle on their money,”  Shepard said.

Tearsheet provides daily summaries of the top news stories and events, like this piece, in a nifty, neat, nicely-packaged daily email. Stay informed. Subscribe here.

Tiller: the personal finance platform replacing Microsoft’s Money in Excel

Microsoft announced that it’s shutting down its Money in Excel offering by mid-2023. Excel, however, remains a people’s favorite when it comes to managing money. So, it makes sense that Microsoft is merely handing over the baton — to an outside developer on a mission to make spreadsheets fitter for personal and business money management.

Say hello to Tiller, an automated personal finance service built on Microsoft Excel and Google Sheets, which aims to combine the ease of an app with the power of spreadsheets.

Tiller’s product is already in the market and has garnered much popularity. 

Read more

Where Credit’s Due Ep.3: Looking at the future of lending as a service with Amount and Stilt

In the third episode of Where Credit’s Due – Tearsheet’s lending podcast -host Iulia Ciutina speaks with Adam Hughes, who’s the CEO of Amount, and Rohit Mittal, the chief executive of Stilt.

This episode focuses on lending as a service – which is one of the trickiest lines of business in our industry and comes with many complexities and challenges, as well as opportunities.

Listen / read more

The latest briefing

Lending Briefing: The SMB Brexit, and digital lending VC funding

Brex took over the headlines these past few days after its announcement that it will stop serving traditional small businesses, focusing only on tech startups with capital backing. 

This news triggered many conversations and opinions in the industry, giving us all a break from talking about crypto and layoffs – the spotlight is now on corporate expense fintechs, which were industry darlings not too long ago. 

Long story short – the fintech realized SMBs were more complicated than anticipated. Given the recent announcement from Brex to stop serving SMBs, how are its competitors looking to address the market?

Read more (exclusive to Outlier members)

Just look at the charts

1. Klarna valuation history

Source: Florian Graillot

2. Has the bankless society officially begun?

Source: Timo Dreger

Today’s stories

Citi makes a move in a push against overdraft fees
Citi has removed overdraft, overdraft protection transfer, and returned item fees from Citi Retail Banking consumer deposit accounts, with the changes have gone into effect the past Sunday (PYMNTS)

The Canadian Purpose Bitcoin ETF has lost half of its assets
The world’s largest Bitcoin spot exchange-traded fund, the Purpose Bitcoin ETF, lost half of its assets likely because of a huge liquidation last Friday, which might have exacerbated Bitcoin’s drop to $17,600 this weekend (CoinDesk)

China’s digital yuan notches $13.8 billion in transactions
China’s digital yuan wallet has been downloaded by 261 million people – about a fifth of the country’s population – and has been used for transactions worth 87.5 billion yuan ($13.8 billion) (Finextra)

Indagare offers luxury travel experiences to Bank of America clients
BofA is offering an exclusive travel experience for ultra-high-net-worth clients through an arrangement with boutique travel company Indagare — the loyalty program offering is connected with BofA’s Preferred Rewards Program, which in total has about 10 million members (PYMNTS)

Stay ahead of the game with Outlier — Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.

With Brex out, how do its competitors plan to serve SMBs? 

Brex took over the headlines these past few days after its announcement that it will stop serving traditional small businesses, focusing only on tech startups with capital backing. 

This news triggered many conversations and opinions in the industry, giving us all a break from talking about crypto and layoffs – the spotlight is now on corporate expense fintechs, which were industry darlings not too long ago. 

Long story short – the fintech realized SMBs were more complicated than anticipated. It was spreading itself too thin, according to founder and co-CEO Pedro Franceschi, and it couldn’t serve either small businesses or startups well. 

“Over time, we realized that our startup customers – the very customers we started with – were growing very fast, and needed Brex to scale with them. Scale AI went from 5 people when we started serving them, to almost 1,000. Brex didn’t work as well for larger companies,” the executive explained in a Twitter thread. 

Brex started out around five years ago as an expense management solution for startups and SMBs, expanding in the latter segment in 2020. Revenues mostly came from interchange fees, as the main product was corporate cards. 

Meanwhile, competitor Ramp also started with offering free services and corporate cards, but its approach is now centered around building software designed to help SMBs save money. Most corporate card companies were incentivizing spending, offering lots of rewards schemes, as this fuels interchange revenues. But small businesses actually want savings, according to Colin Kennedy, chief business officer at Ramp.

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Tearsheet provides daily summaries of the top news stories and events, like this piece, in a nifty, neat, nicely-packaged daily email. Stay informed. Subscribe here.

Credit Karma’s introduces new cash back rewards program for debit consumers

Credit Karma Money is launching cash back rewards for debit card owners, which will be enabled automatically on all Money accounts.

The program will be powered by the Cardlytics cashback platform, whose network of 10,000 local merchants and national chains will reward customers with real cash in their accounts every time they make a purchase.

Consumers will be able to reap rewards for paying with the Credit Karma Visa debit card at stores like Adidas.

Read more

Tearsheet Podcast: Takeaways from this year’s Money 20/20 Europe

Taking place on June 9, Money 20/20 Europe is the largest European fintech conference of the year.

Tearsheet’s Iulia Ciutina and Rebecca Cohen both traveled to Money 20/20 Europe earlier this month. They sat down with Tearsheet’s podcast host and editor-in-chief Zack Miller, to discuss what they saw, learned, and experienced.

Listen / read more

Given the lack of standardization, how should FIs think about ESG reporting?

Currently unregulated and unstandardized globally, ESG is becoming an increasingly confusing arena. And as the financial industry gets more involved in this field, questions and issues are mounting.

There is no doubt that creating a well-defined global framework for ESG and sustainability factors will bring more accountability to the financial sector. 

Regarding quality, the lack of ESG reporting standards leads to a lot of differences when trying to compare companies. The quantity aspect relates to the fact that, given the lack of standardization, companies are free to report the information they feel is most important.

Read more (exclusive to Outlier members)

Just look at the charts

1. Payment initiation and management top the list of common banking functionalities

Source: Innopay

2. Growth trajectory of different industries in 2022

Source: Oyster

Today’s stories

Stripe expands global infrastructure for bank transfers
Stripe is making its bank transfer offering available to businesses in the UK, EU, and Mexico — the global infrastructure promises to take the friction out of bank transfers, saving businesses hundreds of hours on confirming transfers, reconciliation and accounting, and refunds (Finextra)

TD Lab is open-sourcing its TD Equity Resource Hub
Canadian bank TD is open-sourcing its Equity Resource Hub rolled out by TD Lab earlier this year, which is a digital platform that helps integrate diversity, equity, and inclusion into all stages of product and service design (Finextra)

Growth can be deceiving: the end of neobank era?
In some respects, 2021 was a good year for neobanks in the US that grew by a little more than 10 million accounts in 2021, from 23.3 million to 33.5 million — however, despite the positive growth numbers, recent neobank news has not been encouraging (Forbes)

Cheese Financial’s core mission goes beyond Chinese immigrants
The majority of Cheese neobank users are first- and second-generation Asian-Americans who have settled in the U.S., as well as students. However, the firm’s CEO says that a significant number of Hispanic customers have been attracted to the challenger bank’s offerings lately (The Financial Brand)

Stay ahead of the game with Outlier — Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.

Tearsheet’s Iulia Ciutina and Rebecca Cohen both traveled to Money 20/20 Europe earlier this month. They sat down with editor Zack Miller to discuss what they saw, learned, and experienced.

Subscribe: Apple Podcasts I SoundCloud I Spotify I Google Podcasts

The following excerpts were edited for clarity.

In person experiences are back, but not easy

Both Rebecca and Iulia said it was good to experience the rush and excitement of conferences once again after an extended pandemic-induced lull. It was good to meet people IRL that they’ve been working with solely over Zoom.

“You definitely have that sentiment of people meeting for the first time after collaborating online or digitally. There was a sense of togetherness — that we all exist in physical form and not just virtually.” — Iulia Ciutina

Additionally, conferences are places for colleagues within the same organization to meet up. Iulia and Rebecca have been working together close to a year and hadn’t yet met in person — they really got a lot out of sitting and experiencing Money 20/20 Europe together.

“It was really awesome. I’ve been working with Iulia for like a year, and we just got a chance to hug for the first time. That was really cool.” — Rebecca Cohen

But it wasn’t easy being back. Both reported that people felt higher social anxiety than normal and that it was important to find ways to recharge social batteries to make it through the three days of talks, exhibits, and meetings.

The macroeconomic environment is beginning to weigh on things

Rebecca said she asked people she met what they thought of the crypto winter, interest rates rising, venture funding drying up, and a looming recession. She felt like she was raining on the good times parade a bit.

“There’s a lot of uncertainty, there are a lot of question marks. No one is oblivious to what’s going on. But overall, the feeling was like, it’s a good thing — it’s hard, but it’s a good thing.” — Rebecca Cohen

It was Iulia’s first time at Money 20/20 and she heard from conference veterans about the way they saw the trajectory of the show take over the years.

“it’s a cycle. It used to be all about disruption, and about the innovative companies that are going to stay. And then you had the investment boom, where there was just a lot of cash pumping into the startup scene and everybody wanted to bet on the next high growth company that could acquire customers at any cost. But now the sentiment is shifting more to the health of the underlying business. So what are the actual good businesses out there? It’s shifted from disruption towards profitability.” — Iulia Ciutina

Themes

Rebecca reported that JPMorgan had a lot of space. There was a lot about payments. There was a lot of ID proofing and a lot of crypto. There was hype around the metaverse on stage, but you didn’t really see exhibitors on the floor targeting it.

Banks

Traditional FIs like Citi and ING had presence at the conference, mainly for their innovation teams. They weren’t necessarily exhibitors, but they had their own areas upstairs. JPMorgan was an exception — the largest US bank had an Audi on the floor to discuss the future of mobile payments.

Iulia remarked that she feels the FIs don’t feel as threatened of fintech as they did before. The story has turned into a narrative about partnering and finding value in a bundle of services.

“Banks know they can’t innovate as fast. So it’s just a better play for them to let others do it, and hopping on that train or acquire companies.” — Iulia Ciutina

Green Finance at Money 20/20

Iulia said that Green Finance definitely hit the stage at the event. There was a whole stage dedicated to talks around sustainability, financial equity, and things like that. The stage was covered in plants, and was very aesthetic. While there were a lot of representatives from all kinds of payment companies, there wasn’t a presence from climate fintechs or companies that are actually doing something in this space.

“I guess I was a little bit disappointed.” — Iulia Ciutina

Marketing and acquisition

Money 20/20 brings out the best of the best: the best faces, the best swag, the best booths, the best everything, according to Rebecca. She was shocked about how many things at the show were branded. Breakfast, breakaway events, cocktail mixers, and more. And, there were a lot of socks.

“I mean, I feel like socks are not even exciting anymore. There were just so many socks. Everything was branded.” — Rebecca Cohen

Currently unregulated and unstandardized globally, ESG is becoming an increasingly confusing arena. And as the financial industry gets more involved in this field, questions and issues are mounting.

“When I talked five years ago to clients, ESG was hardly a topic. Now, almost everyone wants to issue a sustainability bond,” said Hans Biemans, managing director and head of green and social bonds at INGduring a panel at Money 20/20 Europe. 

There is no doubt that creating a well-defined global framework for ESG and sustainability factors will bring more accountability in the financial sector. Right now, each company sets its own standards, and even the same company can get different results to the same issue given the vast amount of methodologies currently available.

Angel Agudo, VP of product at Clarity AI, a platform that helps companies assess and report climate risks, believes there are two main parts of the overarching problem – one about quality and the other about quantity.

Regarding quality, the lack of ESG reporting standards leads to a lot of differences when trying to compare companies. The quantity aspect relates to the fact that, given the lack of standardization, companies are free to report the information they feel is most important.

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Credit Karma Money is launching cash back rewards for debit card owners, which will be enabled automatically on all Money accounts. The program will be powered by Cardlytics cash back platform, whose network of 10,000 local merchants and national chains will reward customers with real cash in their account every time they make a purchase. The amount of cashback will depend on the specific arrangement the merchant has with Cardlytics. Once the purchase is made, cash is returned to the customer’s Money account instantly.

Poulomi Damany, the VP and GM of assets and tax at Credit Karma, told me that the launch comes as the most recent embodiment of their commitment to “providing financial progress for everybody, not just those who have thousands of dollars in their accounts”.

How it Began

“Consumers trust us with their credit and their data – would they trust us with their money?” was the question that kicked off Credit Karma’s foray into high-yield savings accounts. Damany says that the consumer feedback was heartwarming, as Credit Karma’s audience began to trust their products as well as their goal to make financial progress more accessible.  

The early success and positive reception led to recent products like Credit Karma Money, which allows people to easily open checking accounts. According to Damany, Money was a recognition of the fact that “a number of our users are young, and they’re just starting out on their credit journey”. It was important that Credit Karma enable these people to start their financial journey on the right foot. To this end, the company identified two critical steps: first, it was important that Money allowed consumers to access cash quickly, and second, that it rewarded them for making healthy financial decisions.

The new cash back rewards are “somewhere in the middle” of those two goals, with cash returning to the customer’s wallet after every purchase made at stores like Adidas and Shake Shack, both of which are on the Cardlytics network.

Get Your Cash Back

The program rewards consumers with actual cash in their accounts rather than points, and it also has no minimum spend and no maximum limit. Customers automatically enroll for cash back rewards when they sign up for a Money account. They can use their Credit Karma Visa debit card to make in-store and online purchases. In Damany’s words, it’s meant to be “simple and all-encompassing”, which is in stark contrast with how credit reward programs have historically worked, both in access and mechanics. Farrell Hudzik, EVP Financial Institutions, at Cardlytics shared that with the financial stress many people feel in today’s market, rewards are important. “As inflation rates continue to rise and cause financial stress, every dollar counts and we’re proud to play a small role in providing peace of mind.”

Gen Z and Debit

Credit Karma’s focus on debit is prompted by their 110 million members, many of whom are Millennials or Gen Z. According to Damany, the reason why younger generations avoid credit has to do with the times these consumers grew up in. “This is a generation that has grown up in a financial downturn. They’ve seen their parents go through hard times by getting into debt. So, there’s a little bit of aversion to accumulating debt”. 

Moreover, she added that “this is a mobile generation – they manage everything online. It’s just easier for them to think that ‘I’ve spent the money that I have, my account is now debited, I don’t have any more to spend, so I shouldn’t be taking on debt’.” 

Hence, Credit Karma wants to ensure that when these younger consumer segments pick debit, they don’t miss out on the rewards programs that are part and parcel of every credit card scheme. To this end, earlier the company launched Instant Karma, which rewards consumers for spending the money they already have by giving them a chance to win a full refund on their purchase.

Instant Karma

As a “sweepstakes” program, Instant Karma got to build some great moments where people went into the tire shop and got their four tires paid for, or they walked into a grocery store and had their entire bill paid. This surprise and delight element makes it worthwhile for their customers to ‘play’ for a refund. However, the company didn’t want to stop there, because although consumers were delighted to play and win Instant Karma, there was also the feeling of, “Oh man, I haven’t won in the last X times”, and the anxiety associated with it. That is why even though the cash back rewards do not return the entire amount of the purchase like Instant Karma, they provide a steady beat of cash back, without any uncertainty.

It’s Real Cash

Asking consumers to keep track of points that would be converted to cash delays access to funds, and also complicates the understanding of exactly what they have in their accounts.

Damany pointed out that if a consumer is living “paycheck to paycheck, every little bit of surplus helps” – especially because although their paychecks come twice a month, their bills come once every month, which creates a mismatch between spending and outlays. With cash back, Credit Karma wants to create a bit of a cushion, which takes the guesswork out of earning and managing rewards.

As a wholly owned division of Intuit, Credit Karma’s efforts in the consumer finance space have been supercharged by the acquisition. The company has created a combined ecosystem around tax refunds, which allows consumers to access their refunds in advance. “We wouldn’t have been able to do that on our own without the scale and the support of Intuit,” says Damany.

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The transformation of traditional banking: 3 questions with Rohan Amin, Chief Product Officer at JPMorgan Chase

When the pandemic broke out over two years back, banks around the world were left with no choice but to shut down their branches and restrict access to basic in-person services for consumers.

This shift meant that in order to stay relevant, incumbent banks couldn’t continue to function typically anymore – the way consumers used to bank had changed, and so had the required business model to deliver products and services to them.

Rohan Amin, Chief Product Officer at JPMorgan Chase, shares some insights about digital channels in banking, growing fintech competition, and what Chase intends to accomplish in the future.

Read more

How the microchip shortage is affecting the payments industry

With the Covid-19 pandemic, the global semiconductor supply chain took a significant hit. Buying microchips became more expensive as cycle times increased. As video game makers, smartphones, and automobile manufacturers evaluated where they stood, the payments industry found itself no less immune.

China, the world’s largest chip manufacturer, went into a series of lockdowns as part of the country’s zero-Covid policy. This resulted in the closure of factories and a drastic decrease in output. China’s lockdowns decreased total chip output by 5.1% in March this year. Additionally, the Russian invasion of Ukraine has made half of the world’s supply of neon, an essential ingredient in manufacturing chips, inaccessible.

The chip shortage has now dragged into its second year, and firms are knee-deep in trouble. While chip-based payment cards face the biggest threat, experts say the only aspect of payments immune to the shortage is physical currency. 

As banks look to address the problem, one of the solutions being discussed is extending payment cards’ expiration dates.

Read more (exclusive to Outlier members)

The latest briefing

Banking Briefing: The SMB/fintech fairytale & what makes a successful challenger bank

By now, you’ve probably seen the news about Brex: The Silicon Valley-based fintech, which started out with the goal of funding early-stage startups, has sent a less-than-welcome message to its thousands of SMB customers, telling them to withdraw their funds by mid-August.

It turns out that in light of the funding dry spell, Brex had to make a quick call on who to serve. It opted for its bigger, venture-backed clients, leaving behind SMBs like restaurants and retailers.

These developments beg the question: what does it take to build a successful neobank?

Read more (exclusive to Outlier members)

Just look at the charts

1. Comparing the benefits of different payment methods

Source: FT Partners

2. Who owns the alternative credit market?

Source: David Jimenez Maireles

Today’s stories

Brex cuts off SMBs
The fintech announced it will no longer work with any businesses that don’t have some sort of “professional” funding — either venture capital, angel money or funding from an accelerator (TechCrunch)

“The great negotiation”
A fierce and broad talent war in the asset management industry is driving a “great negotiation” as employers fight to retain and attract staff, according to the chief executive of JPMorgan Asset Management (FT)

Christie’s Web3 expert leaves auction house to run CryptoPunks
After acquiring the coveted CryptoPunks NFT project back in March, Yuga Labs is bringing on Noah Davis, a key part of the NFT team at auction house Christie’s, to be the project’s brand lead (CoinDesk)

Revolut releases its app in five more countries
Revolut is launching a streamlined version of its app in Sri Lanka, Chile, Ecuador, Azerbaijan and Oman, allowing customers to transfer money to over 50 countries using more than 30 currencies (Reuters)

Starling’s moment in the sun
One of a breed of new banks that aims to challenge the UK high street banking giants with technology, Starling sucked up business customers during the pandemic, handing out loans backed with state cash (The Guardian)

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Last week we covered: Wells Fargo under criminal probe for sham job interviews

The transformation of traditional banking: 3 questions with the Chief Product Officer at JPMorgan Chase, Rohan Amin

According to JPMorgan Chase’s December 2021 Digital Banking Attitudes Study: 

• 62% of consumers cited their banking app as a service they can no longer live without, up 7% YoY. 
• As of Q1 2022, Chase has 60.2 million digitally active customers, +6% YoY, and 46.5 million mobile active customers, +11% YoY. 
• Mobile active customers have increased 35% since the pandemic kicked off in Q1 2019, and more than 50% of mobile active customers use financial health tools.

I asked Chief Product Officer at JPMorgan Chase, Rohan Amin, 3 questions about changing consumer banking behavior and where the largest bank in the US is headed.

How has the pandemic affected/transformed the relationship between banks and consumer behavior?

Rohan Amin, Chief Product Officer, JPMorgan Chase: The pandemic forced consumers to re-examine their day-to-day behaviors more closely, including how they bank and achieve their financial goals. We’ve seen a real acceleration towards digital banking over the last two and a half years. Consumers, including our own customers, are using their mobile banking apps for more than just checking their account balances. We give our customers options to choose how they want to bank –  whether online, on our mobile app, or by visiting our branches.

How do you compete with the innovation and quickness of growing fintechs in the space?

Rohan Amin: Over the last several years, Chase has undergone a Product and Agility transformation that has empowered our Product, Data & Analytics, Design and Technology teams to collaborate more efficiently and strategically. Along with user feedback, we use a wide lens to understand what is being done digitally in financial services, at fintechs, and across other industries – to help us compete, attract talent, and better serve our customers. 

Where do you see Chase 5 years from now, in terms of a goal-setting framework?

Rohan Amin: In the time ahead, our digital products and features will continue to help consumers manage their finances, make payments, invest, save, book travel and more. Our agility and product transformation efforts are central to our ability to continuously innovate and meet the changing needs of our customers today and in the future.

Top stories of the week

AFFIRM
Affirm joins hands with Agoda to bring BNPL to hotel reservations
Affirm is partnering with global travel platform Agoda, part of Booking Holdings. The new partnership will enable qualified travelers to book their hotel accommodations for future trips across the Agoda platform, both on the web and via the app, and pay over time for reservations above $50. (Seeking Alpha)

AMEX
AmEx introduces the first crypto card on its network
Abra, a digital asset financial services company, is bringing the first crypto rewards credit card ‘Abra Crypto Card’ on the American Express network that will transact in U.S. dollars and offer crypto back on any sum and shopping category. (Fortune)

BANK OF AMERICA
BofA is keeping a watch on employee attendance
Bank of America, like Goldman Sachs and JPMorgan, is monitoring employee attendance. The bank wants its suits back in the office at least four days a week, while the bigwigs in M&A want to see their staffers back five days a week. (Business Insider)

Bank of America targets corporate cash management growth
BofA is bringing out an extension of its virtual account management (VAM) tool for its US consumers. The tool, already available in Europe, helps companies manage multiple accounts by creating a virtual ledger, accessible online, that shows all their banking history, account balances, and transactions, and can model future cash flow. (Reuters)

CITIZENS
Citizens, Cullen/Frost Banks jump on the bandwagon of removing NSF fees
Citizens Financial Group and Cullen/Frost Bank are planning to get rid of NSF fees paid by customers who bounce a check or have a debit card purchase rejected. On the other hand, Frost Bank expanded its 14-month-old $100 overdraft grace feature so that it is available to all Frost Personal Account and Frost Plus Account customers. (American Banker)

FISERV
Zelle – Fiserv partnership going strong with 1000 FIs 
Nekoosa Port Edwards State Bank became the 1000th financial institution to use the digital payments network, Zelle, via Fiserv. (PYMNTS)

JPMORGAN CHASE
JPMorgan is bullish on a huge investment in the tokenization of traditional assets 
JPMorgan Chase’s head of Onyx Digital Assets, Tyrone Lobban, revealed that the bank has identified a mechanism for DeFi developers to take advantage of non-crypto assets’ yield-generating potential. Integrating DeFi products will further grant the bank’s institutional clients more connections to the tokenized assets world. (CoinDesk)

MASTERCARD
Mastercard brings its payments network to Web3 and NFTs
Mastercard is working to enable NFT commerce with Immutable X, Candy Digital, The Sandbox, Mintable, Spring, Nifty Gateway, and Web3 infrastructure provider MoonPay – to allow people to use their Mastercard cards for NFTs purchases, whether that’s on one of these companies’ marketplaces or using their crypto services – without the need to buy crypto first. (Mastercard)

Mastercard broadens the use of network tokens with Spreedly
US-based payment orchestration platform Spreedly has collaborated with Mastercard to support, expand, and augment tokenized authorization transactions for merchants. Network tokens reduce the chances of card data compromise, improve authorization rates and provide flexibility for network token transactions on supported gateways and with other payment service providers that are developing network token capabilities. (PaymentsJournal)

DFC and Mastercard join forces to deepen financial inclusion in Central America
US International Development Finance Corporation has teamed with Mastercard to deepen financial inclusion in Guatemala, Honduras, and El Salvador. This partnership will focus on allowing individuals and businesses to transact digitally, securely, and efficiently. It will also cater to the previously underserved communities with digital features to transact, get access to credit, and develop a credit history. (PYMNTS)

MONEYGRAM
MoneyGram is all set to roll out its service ‘Cash to Crypto’ 
As a result of a partnership with the Stellar Development Foundation, the organization behind open-source public blockchain Stellar, MoneyGram is rolling out a service that will enable users to buy cryptocurrency using cash, as well as allow them to withdraw their crypto holdings in cash, at select MoneyGram locations. (Finovate)

PAYPAL
PayPal expands BNPL offering with ‘Pay Monthly’
Instead of having to pay off purchases over six weeks as in the previous BNPL payment option, the new service, PayPal’s Pay Monthly allows users to break down their purchases into monthly payments over a 6 to 24-month period. (TechCrunch)

Grubhub teams up with PayPal and Visa to pay drivers more quickly
Grubhub, a food ordering, and delivery marketplace is rolling out Instant Cashout via Direct to Debit. The new payout option, enabled by Hyperwallet from Paypal and Visa Direct1 – Visa’s real-time2 money movement network – offers easy access to earnings by allowing any driver with an eligible bank debit card to deposit their accrued earnings to their eligible debit or prepaid card. (PaymentsJournal)

SEC
SEC’s Chair opens an investigation into Goldman’s ESG funds
Under SEC’s new Chairman, Gary Gensler, ESG reporting has become a top priority for the agency. The probe into Goldman’s ESG funds appears to be linked to the new administered move, when earlier this year, the commission proposed changes that would require more transparency from companies to investors about the risk that climate change and new government policies on it might pose to their operations. (The New York Times)

TD BANK
TD rolls out a new payment plan for its credit card consumers
TD Bank is rolling out ‘TD Payment Plans’, a new set of control features for consumer credit cards. With this feature, eligible TD cardholders can enroll qualifying purchases of $100 or more into equalized monthly payments, with 6,12, or 18-month term options. (Finextra)

WELLS FARGO
Wells Fargo predicts mortgage banking income to drop 50%
Wells Fargo chief financial officer, Mike Santomassimo, foresees that the bank’s mortgage income could sequentially fall “close to 50%” in Q2. This descent would be a result of a hike in interest rates deterring refinancing activity and affecting home affordability in the purchase origination market. (Seeking Alpha)

WESTERN UNION
Western Union integrates Mambu into its European digital bank platform
Germany-based cloud banking platform Mambu has teamed up with Western Union. Mambu will integrate its solution into the Western Union’s next-generation real-time multi-currency digital wallet and digital banking platform in Europe. The new offering will help Western Union transform the transactional relationships it has with customers, into closer customer-centric connections. (Bloomberg)

Tweets of the week

1.

Source: Watcher.Guru

2.

Source: @Bitcoin

Charts of the week

1. Earnings revisions plummet

Source: Daniel Lacalle

2. Latin America fintech deal activity in Q1 2022

Source: Fintech Global

What’s trending

Customers now fear they will never be able to access funds that are locked on Celsius (CoinDesk)

Coinbase is laying off 18% of its employees less than two weeks after the company extended a hiring freeze (MarketWatch)

Black employees in the category that includes midlevel managers totaled 777 at Citi this year (Banking Dive)

90% of crypto users plan to buy more over the next 6 months, according to BofA survey (CNBC)

Stay ahead of the game with Outlier — Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.

When the pandemic broke out over two years back, banks around the world were left with no choice but to shut down their branches and restrict access to basic in-person services for consumers. This shift meant that in order to stay relevant, incumbent banks couldn’t continue to function typically anymore – the way consumers used to bank had changed, and so had the required business model to deliver products and services to them.

Limiting branch access back then acted as a catalyst for the accelerated adoption of digital channels, such as mobile banking and customer support through artificial intelligence. 

In a way, the pandemic has helped the financial industry to be disrupted with new opportunities and healthy rivalries. It paved the way for a growing number of fintechs bridging the gap between what traditional banks offer and what the modern consumer has come to expect in recent times – to meet the demand for speed, real-time activities, the need to not be present in person for basic services, and a better user experience.

Surveys have shown that consumers are no longer interested in returning to their previous channel preferences now that the pandemic has almost subsided. Customers insist on continuing to bank digitally, as they have become used to the bank as an app rather than an institution.

According to JPMorgan Chase’s December 2021 Digital Banking Attitudes Study: 

• 62% of consumers cited their banking app as a service they can no longer live without, up 7% YoY. 
• As of Q1 2022, Chase had 60.2 million digitally active customers (+6% YoY), and 46.5 million mobile active customers (+11% YoY). 
• Mobile active customers have increased 35% since Q1 2019, and more than 50% of mobile active customers use financial health tools.

I spoke with Rohan Amin, Chief Product Officer at JPMorgan Chase, about digital channels in banking, growing fintech competition, and what Chase intends to accomplish in the future.

How has the pandemic affected/transformed the relationship between banks and consumer behavior?

Rohan Amin: The pandemic forced consumers to re-examine their day-to-day behaviors more closely, including how they bank and achieve their — highly personal — financial goals. We’ve seen a real acceleration towards digital banking over the last two-and-a-half years. Consumers, including our own customers, are using their mobile banking apps for more than just checking their account balances. For example, our 2021 study found that 13% of respondents said they have used their bank’s website or app to book travel, while 34% of those who had not used this feature said they would be willing to try.  

Throughout the pandemic, customers have been engaging with us more digitally than ever before, but roughly 70% of customers have also continued to visit their local branch in 2021 as many people want personal interaction and the satisfaction that comes from chatting with their banker or financial adviser. We give our customers options to choose how they want to bank – whether online, on our mobile app, or by visiting our branches. Additionally, when the pandemic emerged, we created our Meeting Scheduler tool available on the Chase mobile app and website, to help customers facilitate and schedule their in-person appointments.

How do you compete with the innovation of growing fintechs in the space?

Rohan Amin: There are very few companies that have the size and scale of Chase. We serve more than 66 million households in the U.S. and have more than 60 million digitally active customers. Over the last several years, Chase has undergone a Product and Agility transformation that has empowered our Product, Data & Analytics, Design and Technology teams to collaborate more efficiently and make strategic decisions at speed and at scale. This transformation helps us compete, attract talent, and better serve our customers.

Our customers are at the center of everything we do. We use a wide lens to understand what is being done digitally in financial services, at fintechs, and across other industries – these insights, including feedback from our customers, are put to use to continuously improve our user experience.

Where do you see Chase 5 years from now, in terms of a goal-setting framework?

Rohan Amin: Job number one is helping our customers make the most of their money. In the time ahead, our digital products and features will continue to help consumers manage their finances, make payments, invest, save, book travel, and more. Our agility and product transformation efforts are central to our ability to continuously innovate and meet the changing needs of our customers, today and in the future.

With the Covid-19 pandemic, the global semiconductor supply chain took a significant hit. Buying microchips became more expensive as cycle times increased. As video game makers, smartphones, and automobile manufacturers evaluated where they stood, the payments industry found itself no less immune.

China, the world’s largest chip manufacturer, went into a series of lockdowns as part of the country’s zero-Covid policy. This resulted in the closure of factories and a drastic decrease in output. China’s lockdowns decreased total chip output by 5.1% in March this year. Additionally, the Russian invasion of Ukraine has made half of the world’s supply of neon, an essential ingredient in manufacturing chips, inaccessible.

The chip shortage has now dragged into its second year, and firms are knee-deep in trouble. In January, a U.S. Department of Commerce survey found the median inventory levels of chips at U.S. companies down from 40 days in 2019 to five days in 2021. Furthermore, the median demand for chips was found to be 17% higher in 2021 than in 2019. This is a major supply and demand mismatch, the department concluded.

The modern payments industry’s most prolific product is the payment card. Most of these cards now use an EMV chip, which stores the holder’s information and enables communication with other devices, like ATMs and POS terminals. So, the bottom line is, as chips are getting difficult to source, cards are getting difficult to produce – and banks don’t like that. After years of getting in the habit of freely making and sending out cards, they are being forced to predict and budget their production.

“Banks can certainly account for and budget their chip use for customers with expiring cards, but of course, you cannot plan for human error. If a customer loses their card, they immediately need a replacement,” Ruby Walia, senior advisor for digital banking at Mobiquity, told Tearsheet. “However, with the chip shortage, that may not be possible.”

“Frankly speaking, the only aspect of payments that can avoid this issue is physical currency.”

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