July 21, 2017

Banks push back against SoFi bank charter…
Well that escalated quickly. After reports that SoFi had applied for an industrial loan company (ILC) bank charter in Utah, industry trade groups pushed for the FDIC to reject the application. The ICBA (Independent Community Bankers of America) positioned the ILC charter as a loophole and argues that SoFi should be subjected to the same regulation as traditional banks. The CBA (Consumer Bankers Association) was less direct in its criticism, but noted that SoFi’s current model is incompatible with the CRA (Community Reinvestment Act) which requires banks to support low-income groups. I’m sure the threat of competition has nothing to do with the pushback, though…

…while SoFi keeps moving forward
Not content to continue to grow in student lending, mortgages, wealth management, and a still-to-be-launched deposit product, SoFi is trying to shake up the title insurance/search industry. Speaking at Fortune’s Brainstorm Tech conference, SoFi CEO Mike Cagney described the company’s plans to use the blockchain to handle title insurance and bypass the normal title search process since everything will be available on an open distributed ledger. While a pilot would require that a county agrees to convert its entire system onto a distributed network, Cagney said they have already found a county willing to make the change. SoFi is trying to have something ready to launch by the end of this year.

Fintech Fundings
While the frenzy of fintech startups raising capital has slowed a bit from a year or two ago, there have been quite a few notable deals this summer. Recently, LendKey, which helps smaller banks and credit unions make student loans, raised $13MM in a Series C round and announced a partnership with WSFS. Fintech Studios, an “artificial intelligence financial information network” based in New York raised $1MM of seed funding. A trio of London startups also raised funds, with Revolut, a “banking alternative” offering payments, checking accounts, personal loans, etc., leading the way in raising $66MM in a Series B led by Index Ventures, with participation from Ribbit and Balderton. Additionally in London, Receipt Bank, a bookkeeping automation company, raised $50MM in a Series B round, and Tide, a mobile bank for small businesses, raised $14MM in Series A led by Anthemis.

The ATM Strikes Back…
Like any normal day, many customers made deposits and withdrawals at a Bank of America ATM in Corpus Cristi, Texas. Unlike a normal day, some customers received an extra handwritten receipt asking for help. Most customers thought it was a prank and ignored the pleas, but thankfully one person showed the note to a police officer, who was able to free the ATM serviceman who had become trapped in the ATM vault while trying to repair the door. He was stuck behind the ATM, without his phone, for roughly three hours before finally being freed.