What Will Be the Top Fintech Trend in 2024? Hint: It’s Not AI.

What Will Be the Top Fintech Trend in 2024? Hint: It’s Not AI.

When it comes to predicting the next leap in fintech, you have to risk not only getting things wrong, but also being ok with it. So while I could play it safe and predict that the top fintech trend in 2024 will be AI, or industry consolidation, or even growth in the use of buy now, pay later tools, I’m going to step into less charted territory and say that the 2024 fintech buzzword will be quantum computing.

Why quantum computing?

The concept of leveraging quantum computing in financial services is dated; it has been around since the early 2000s. However, there are three main factors why 2024 may be the year the conversation around this topic really takes off.

  1. Cost savings opportunities
    Banks and other industry players are currently in a wrestling match with today’s economic environment, the expensive cost of capital, and an increase in competitors vying for customer attention. This, combined with an onslaught of new regulatory constraints that not only restrict operations but also result in new costs, has banks looking for new ways to both cut costs and add new revenue streams. Quantum computing’s promise to help firms increase speed, efficiency, and decrease risk appears to be a green field of revenue opportunity for organizations across the sector.
  2. Technological demands
    The financial services industry loves generative AI, but even though it is the hottest topic in fintech at the moment, it comes with its own set of restrictions. Because it relies on enormous sets of data to work effectively, generative AI requires scalable computing power. As the use of AI evolves and data sets become increasingly larger and more complex, quantum computing may become a requirement to train AI models quickly.
  3. Hardware developments
    Developments in quantum computing hardware have been slow over the past few years, making the technology inaccessible and unreasonable, even for larger financial services firms. IBM may be changing this, however. Earlier this month, the computing giant unveiled its latest computing chip, Condor, that has 1,121 superconducting qubits and can perform computations beyond the reach of traditional computers. IBM also released Heron, a chip with 133 qubits that boasts a lower error rate.

    Along with these hardware releases, IBM also unveiled its development roadmap for quantum computing, which pegs 2024 for the launch of its code assistant and platform.
Image courtesy of IBM

What to expect in 2024?

Let me be clear that next year won’t be the year that financial services organizations experience widespread adoption of quantum computing. The industry has a long road ahead when it comes to leveraging the new technology and will face challenges with hardware stability, algorithm development, and security.

Despite these challenges, we will see a small handful of larger firms dabble in quantum computing in 2024. Many already are. Earlier this year, Truist Financial joined IBM’s Quantum accelerator program and MUFG purchased an 18% stake in a quantum computing startup called Groovenauts. And just today, HSBC announced it has implemented quantum protection for AI-powered foreign exchange trading, using quantum cryptography to safeguard trading data against cyber threats and quantum attacks.

These firms’ developments in quantum computing will spark conversation and development plans among mid-market firms. It is the conversation– rather than the implementation– around quantum computing that will burgeon in 2024.

Use cases in financial services

So how will firms end up using quantum computing? Specifically, the new technology will enable organizations to develop better algorithms around risk assessment, portfolio optimization, encryption, and security.

In the coming years, as quantum computing chips become more accessible, we’ll see use cases including faster transaction processing for high-frequency trading and settlement systems, customer behavior analysis and personalized financial services, and financial modeling that can more accurately predict market behavior and economic scenarios.

Photo by Dynamic Wang on Unsplash

What ChatGPT Got Wrong about Top 5 Fintech Trends of 2024

What ChatGPT Got Wrong about Top 5 Fintech Trends of 2024

I’ve received dozens of 2024 fintech trends prediction pitches in my email inbox over the past month. And while many of them are insightful, I wanted to see what our AI overlord ChatGPT had to say about the matter.

My prompt read, “What are your predictions for the top five newest and hottest trends in fintech for 2024?” Here is how the AI responded:

Predicting the exact trends for 2024 is speculative, but here are potential emerging trends in fintech:

  1. Embedded Finance: Further integration of financial services into non-financial platforms like e-commerce, SaaS, and marketplaces. This trend will offer users seamless access to financial products within their daily activities.
  2. Metaverse Finance: With the growing popularity of the metaverse, fintech might explore virtual currencies, digital assets, and decentralized finance (DeFi) solutions tailored for this space.
  3. AI-Powered Personalization: Enhanced AI-driven tools for hyper-personalized financial recommendations, wealth management, and banking services. AI will further analyze vast datasets to offer tailored financial advice.
  4. Climate and Sustainable Finance: Continued growth in green finance, impact investing, and ESG-driven financial products as consumers and investors prioritize sustainability.
  5. Regulatory Evolution: Fintechs navigating evolving regulations, especially around data privacy, digital currencies, and open banking. Compliance and adapting to regulatory changes will remain crucial.

As usual, ChatGPT not only did a pretty good job, but it also sounds pretty convincing. And while there are truly no blatant errors in the prediction, it could be better. Here’s what’s wrong or what’s missing in each of the five predictions.

Embedded finance

ChatGPT was spot on. It is quite obvious that this will be a big trend in 2024. Why? Because it’s a big trend right now. However, this is more of a continuation of a current trend rather than a new trend in 2024. Also, ChatGPT failed to mention the role that regulation will likely play in embedded finance next year, especially in the U.S. That’s because partner banks have become more wary to partner with fintechs after the FDIC issued a consent order to Cross River Bank, saying that it was involved in unsound banking practices. Where there is opportunity, there is liability.

Metaverse finance

ChatGPT was wrong. This is one trend that can be thrown away with all of those 2023 desk planners out there. The metaverse offered a fun distraction during the pandemic, when the industry was obsessed with moving all of a bank’s operations to digital channels. However, most consumers lack interest in moving their lives to the metaverse, and banks have realized that their investments in more traditional channels are more likely to pay off.

AI-powered personalization

This is another win for ChatGPT. However, personalization is not the only AI-powered aspect of banking and fintech that will surge in 2024. Many organizations are now turning toward generative AI, which has the potential to produce creative outputs for generating investment strategies, designing financial products, building marketing campaigns, simulating data to predict market movements, simulating economic scenarios, or stress-testing financial systems.

Climate and Sustainable Finance

While I want to believe ChatGPT on this prediction, I wouldn’t list it among the top five trends for 2024. There are two major reasons why sustainable finance will take a backseat (though not disappear) next year. First, the high cost of capital has both banks and fintechs searching for new revenue opportunities. Given this high interest rate environment, firms are more focused on direct cost-saving and revenue growth initiatives such as AI. Second, in many geographies, regulation has not caught up with sustainability initiatives. This lack of regulation and industry standards makes it difficult for organizations to pose definitive claims about what they are doing for the environment.

Regulatory evolution

This is absolutely among the top trends I have my eye on for 2024. Again, this is a continuation of a current trend and not a new development, but it will remain at the forefront in fintech next year. ChatGPT cited regulatory changes across data privacy, digital currencies, and open banking. In regards to open banking, the CFPB released its notice of proposed rulemaking to implement Section 1033 of Dodd-Frank earlier this year and made clear that it will issue the final regulation in the fall of 2024.

One piece that ChatGPT left off its list of anticipated regulatory changes is the formalization of rules around buy now, pay later (BNPL) companies. As consumers rely on BNPL payment technologies as an alternative to traditional credit models, regulators in both the U.S. and the U.K. have announced their intent to formalize regulation in the space.

Photo by Matheus Bertelli

An Overview of the Native American Fintech Scene

An Overview of the Native American Fintech Scene

To celebrate the start of Native American Heritage month, we wanted to highlight the current landscape of the Native American fintech scene. There’s one problem– while the culture of Native Americans in the U.S. is vibrant and alive at the moment, tools to serve this group’s unique financial needs are not.

There are, however, a handful of organizations to highlight in this space.


Totem is currently the only fintech aimed at specifically serving indigenous people. The startup was founded in 2022 as a digital bank to serve Native Americans. The app not only offers direct deposit and a debit card, but also serves as a place where users can search information on tribal benefits and programs.

Native American Venture Fund

The Native American Venture Fund is a platform that offers impact investment opportunities to investors looking to support indigenous communities. The firm’s goal is “to leverage a tribe’s economic and legal advantages to develop and operate successful business enterprises and provide job opportunities for tribal members and the local community workforce.”

KeyBank’s Tribal-Specific Banking

KeyBank is very intentional in the way it serves its Native American clients. The Ohio-headquartered bank has a specific team to offer credit, treasury management, capital markets, investment management and public finance products to tribal nations.

First Nations Financial Management Board

While not in the U.S., Canada-based First Nations Financial Management Board allows indigenous people to be eligible to borrow at similar rates and terms as other governments in Canada. It also allows tribes to use different revenue streams like taxation, government transfers, and economic development as security for borrowing under the FMA.

Banks and Credit Unions

In addition to these financial services organizations, there are a small handful of banks and credit unions serving First Nations communities. Earlier this year, NerdWallet published a blog post listing 30 U.S.-based financial institutions.

Why the lack of tools and services?

This list needs some work. There are currently 574 Native American tribes and Native Alaskan villages that are spread out across cities and the 326 federally recognized Indian reservations. Most Native Americans have severely limited access to traditional financial services and rely on clunky websites and paper-based processes to receive and maintain benefits. As an example, I own a home that I rent out to a Native American family. Eight family members live in the home, and they pay their rent each month using four separate U.S. Postal Service money orders.

There are two main drivers behind the lack of credit opportunities, resources, and education for Native Americans. First, most Native Americans and tribal units are not wealthy. If a fintech wanted to serve this group’s particular needs, it may be difficult to monetize and scale. Second, each tribe has its own unique culture and many tribes also have their own constitution. What’s more, different tribal members receive unique sets of financial benefits and resources, which can be difficult to track and manage without the proper tools. Building one solution to fit all tribes’ needs would be a challenge. Can fintech do better?

Photo by RDNE Stock project

7 Things to Know about the U.S. Federal Reserve’s Novel Activities Supervision Program

7 Things to Know about the U.S. Federal Reserve’s Novel Activities Supervision Program

Earlier this month, the Federal Reserve (Fed) rather quietly released a letter that addresses what it is calling the “creation of novel activities.” Signed by Michael S. Gibson, the Board’s Director of the Division of Supervision and Regulation, the letter is titled, Creation of Novel Activities Supervision Program.

If you’re a fintech or a bank, the contents of the letter will likely apply to you. Here are 7 highlights of the newly created program.

Who is impacted

The letter applies to all banking organizations supervised by the Fed, including those with $10 billion or less in consolidated assets. Organizations will receive a written notice from the Fed if their activities will be subject to examination. Those who are still in the exploration phase will be “routinely monitored” for active engagement.

What is it for

The program will focus on activities related to crypto-assets, distributed ledger technology (DLT), and what the Fed is calling “complex, technology-driven partnerships with nonbanks” that deliver financial services to end customers.

The target

The letter explains that the Fed will “enhance supervision” over the following categories:

  • Partnerships where a non-bank provides banking products and services to end customers via APIs that provide automated access to the bank’s infrastructure.
  • Activities such as crypto-asset custody, crypto-collateralized lending, facilitating crypto-asset trading, and stablecoin issuance and distribution.
  • The exploration or use of DLT for issuing tokens or tokenizing securities or other assets.
  • Organizations that provide traditional banking services to crypto-related companies.

How will it supervise?

The program will leverage existing supervisory processes and will use the Fed’s existing supervisory teams instead of creating a new portfolio to monitor activity. The supervision will be risk-based, meaning that the intensity of the scrutiny will vary based on each firm’s engagement in novel activities mentioned above.


The Fed is seeking to strengthen its existing oversight of banks’ third party fintech partnerships. In the letter, Gibson reasons that innovation can lead to rapid change in banks and in the financial system in general, and that it has the potential to generate risks that can impact banks’ safety and soundness. “Given the novelty of these activities,” he states, “they may create unique questions around their permissibility, may not be sufficiently addressed by existing supervisory approaches, and may raise concerns for the broader financial system.”

Future plans

The Fed explained that it will continue to “build upon and enhance” its technical expertise to stay abreast of fintech trends, the risk associated with the trends, and appropriate controls to manage risk. In addition to increased supervision, the letter explains that the program will help shape supervisory approaches and create guidance for banking organizations engaging in the use of these “novel” technologies.

So what?

The Fed is making it clear that the lack of regulation for fintechs and the Wild West environment of the crypto realm is a thing of the past. This means that fintechs– especially those engaged in crypto– will need to be ready to answer not only to banks, but also to the Federal Reserve. On the flip side, banks will need to be ready to ask a lot more questions before engaging with fintechs, formalize partnership processes, and document all that they can regarding potential risk.

Questions about the letter can be sent via the Federal Reserve’s website..

Photo by Jewel Tolentino

Citizens Bank of Edmond Goes National

Citizens Bank of Edmond Goes National

Citizens Bank of Edmond has a single branch located in Oklahoma– what many people consider a “fly over state.” The town of Edmond, where the building is located, boasts a population of just under 100,000 people. That’s not stopping President and CEO Jill Castilla from pursuing growth, however.

Castilla announced today that her bank– with $400 million under management and just 55 employees– is taking Citizens Bank of Edmond national. Now, U.S. citizens across the country can sign up for a retail bank account at Citizens Bank of Edmond. The move broadens the bank’s reach to around 300 million people.

“In an unprecedented 72 day timeline to implementation, Citizens proves that small banks can be nimble, fast, thorough, sophisticated and still deliver a George Bailey-like experience,” said Castilla in an announcement on LinkedIn. “We love leading the way for other community banks to stay relevant for decades to come!”

Powering the launch is digital banking technology company Narmi. Founded in 2016 by former bankers Nikhil Lakhanpal and Chris Griffin, Narmi has a mission to offer financial institutions the best digital banking platform in the industry. The New York-based company offers both retail and commercial accounts, as well as a digital account opening solution that takes only two minutes and 13 seconds to complete.

Narmi, which has amassed $55 million in funding, counts Radius Bank (now Lending Club), Greater Alliance Federal Credit Union, Berkshire Bank, Freedom Credit Union, and more among its clients.

By opening its digital doors to everyone in the U.S., Citizens Bank of Edmond is breaking down geographical barriers. This shift toward “affinity banking” or “identity-based banking” will enable Citizens Bank of Edmond to take advantage of the brand identity and recognition it has spent the past few years building.

During the pandemic, the bank leaned hard into its focus on community and the small businesses that make up the community. For example, Castilla frequently shared her phone number on public channels as a resource for those in need. She also contacted all of the bank’s business customers to determine their main areas of stress. And when the bank had to close its lobby, its employees met customers at the curb to schedule time slots to serve its customers and maintain a personal touch.

It will be interesting to see how Citizens Bank of Edmond plans to maintain that level of personal touch while scaling up its accounts. Given Castilla’s fastidious determination, however, I do not envision the bank will have an issue maintaining its reputation of offering a top-notch customer experience. To hear Castilla talk about customer experience in person, come to FinovateFall next month and check out her panel.

Four Reasons Why Goldman Sachs and Apple Are Breaking Up

Four Reasons Why Goldman Sachs and Apple Are Breaking Up

Rumors have circulated that the partnership between one of the biggest names in finance – Goldman Sachs – and one of the biggest names in tech – Apple – is coming to an end.

Specifically, the reports suggest that Goldman Sachs is looking to exit its financial relationship with Apple. Goldman Sachs is Apple’s partner for its Apple Card – and has been since 2019. Goldman Sachs is also Apple’s partner for its Buy Now Pay Later service, currently in beta. Reports from the Wall Street Journal indicate that Goldman Sachs is looking to off-load its Apple credit card business to American Express.

So why has the relationship soured? Here are four possible factors:

Know Your Customer

One of the big headline issues hinting at friction between Goldman Sachs and Apple occurred when Apple CEO Tim Cook was testing the Apple Card and was unable to get approved. The issue had to do with fraud protection protocols on Goldman Sachs’ side. The company’s underwriters rejected the application because, as a well-known, high-profile individual, Tim Cook is often impersonated by fraudsters. This appeared to be a one-off problem at first. But an investigation by the U.S. Consumer Financial Protection Bureau led to additional concerns about disputed transactions and, ultimately, reports of gender bias in the granting of credit limit increases. Goldman Sachs was cleared of any wrongdoing, but the drama helped stoke tensions between the company and Apple.

Culture Clash

It’s not surprising that there were issues between the East Coast Wall Street culture of Goldman Sachs and the West Coast Silicon Valley culture of Apple. But there were very real challenges in the working relationship between the two firms. As is often the case when “move fast and break things” technologists team up with the rules-based world of finance, there was a tension between what one person called a focus on “the sleek technology and product pizazz” on the one hand and “regulatory compliance and profitability” on the other. Even at a more mundane level, basic issues such as the timing of billing statements and card design became grist for conflict and development delays.

The Bank Behind the Curtain

Writing at 9to5 Mac, Chance Miller noted that in addition to losing a ton of money with Apple Card – more than $1 billion by January 2022 – there are other ways that Goldman Sachs was losing out on the Apple partnership. Miller points out that not only was Apple developing its own in-house financial service project (called “Project Breakout”), but also there were other aspects of the relationship that ill-served Goldman Sachs. “One thing to keep in mind is that most Apple Card users likely don’t even know Apple Card is backed by Goldman Sachs,” Miller wrote. “Goldman Sachs exists in the backend, and everything else is managed directly through the Apple Wallet app.”

While this relationship is common in fintech and financial services, it seems like a poor approach for Goldman Sachs, which is newer to the consumer business than Chase or American Express and was likely seeking to build its consumer brand via its association with Apple. Couple that issue with the financial losses, and the potential of Apple “breaking out” on its own, and Goldman Sachs may have one more reason to start second-guessing its Apple Card gambit.

Whose Idea Was This Anyway?

When Goldman Sachs first announced its partnership with Apple, there were many who questioned the financial institution’s deepening foray into consumer banking. Goldman Sachs earned its lofty reputation in the world of finance as a leading investment bank and investment management firm. To say that consumer banking was not a core Goldman Sachs competency would be an understatement. But in the wake of the financial crisis, with Wall Street banks desperate for new revenue sources, consumer banking and the rise of fintech were alluring opportunities to an institution like Goldman Sachs. Goldman Sachs had room to grow – and money to burn. The firm also had a brand name and reputation that would help it gain the attention it would need in an increasingly competitive market.

But projects like Marcus rose and plateaued, with an initial rush of deposits leading to overly optimistic profit forecasts and, ultimately, significant losses. Efforts to expand into areas such as investing via Marcus revealed that Goldman Sachs was not as innovative as smaller upstarts like Robinhood. An attempt to leverage opportunities in consumer lending with the acquisition of Buy Now Pay Later startup GreenSky proved costly.

Seen through this lens, Goldman Sachs’s issues with Apple Card may have more to do with Goldman Sach’s issues with consumer banking.

Photo by cottonbro studio

Disability Empowerment: How Fintechs Help Us Overcome Physical, Cognitive Challenges

Disability Empowerment: How Fintechs Help Us Overcome Physical, Cognitive Challenges

Disability Pride Month is coming to a close. The annual July commemoration is an opportunity to honor the experience and achievement of those in the disability community. The month of July is special because President George H.W. Bush signed the Americans with Disabilities Act into law on July 26, 1990. The landmark legislation was the first comprehensive law enshrining the civil rights of people with disabilities.

Today we take a look at just a handful of ways financial technology and the financial services community is helping support people with disabilities, whether those challenges are physical or cognitive, transitive or enduring.

There are some who bristle at the euphemism “differently abled.” But the idea of leveraging one ability to make up for another is at the heart of inclusion when it comes to people with disabilities. This is true when we are talking about technologies that enhance the power of hearing or touch for those with visual challenges. It is also true when we talk about a digital banking world that ultimately makes banking services more accessible to all – including those who cannot easily travel.

At the same time, greater awareness of the challenges faced by those with physical and cognitive challenges also means understanding the limits of technology. A pilot project in 2010 that explored disability inclusion in microfinancing institutions in Africa produced what one observer called “several clear conclusions from this pilot worth repeating because they are likely to have near universal application for MFIs entering this market.” The recommendations?

Don’t develop special credit products. Don’t give special conditions. Don’t get disappointed too soon. Identity existing clients with disabilities. Learn from them and use them in promotional efforts and in reaching out to new clients. Join efforts with local disability organization. Improve the physical accessibility of the premises.

A sizable number of government organizations and non-profit entities exist to help support people with disabilities secure employment, housing opportunities, as well as economic and health benefits. In many instances, non-profits have benefited from partnerships with financial institutions. This includes the partnership between JP Morgan Chase and the National Disability Institute. The bank, for example, is backing the NDI’s effort to inform and educate low- and moderate-income individuals with disabilities about the resources available to them under the Community Reinvestment Act (CRA).

The partnership between NDI and JP Morgan has produced some interesting insights into the challenges of small business owners with disabilities, as well. The report, Small Business Ownership by People with Disabilities: Challenges and Opportunities, makes a number of important points – foremost among them that entrepreneurialism is often a major employment choice for people with disabilities. The reasons for this vary from preferring a more flexible work schedule to previous experiences with discrimination or a hostile work environment to a lack of advancement opportunities. Importantly for people in financial services and fintech, the report noted that smaller, disability-owned businesses often avoid traditional financial channels and struggle to secure financing.

The causes for this aversion include concerns about using personal assets as collateral, a lack of assets, or benefit-related issues – such as a fear of losing social security benefits if their countable assets climb too high. Helpfully, the report provides a number of recommendations to help banks and fintechs better serve disability-owned businesses. These suggestions include greater investment in CRA funds for small businesses to more support of policies that would boost business opportunities, access to capital, and better coordinate of public resources.

Check out the full study.

Sometimes helping people with disabilities means helping people who help those with disabilities. According to data from co-parenting solution provider SupportPay, 38 million people are taking care of loved ones in 2023. To this end we share news that SupportPay has unveiled a new app designed to make it easier for caretakers to share, manage, and track expenses. The solution also enables caretakers to coordinate schedules and streamline communication. It is expected to be available in the fall of 2023.

Sheri Atwood, SupportPay founder and CEO, highlighted the fintech component of the new offering compared to other solutions on the market. “While several caregiver solutions are entering the market, none are focused on reducing the stress of managing expenses between multiple caregivers,” Atwood explained. “Our solution is built to solve this pain point by simplifying and streamlining this process.”

More than 65,000 parents are using SupportPay to manage more than $450 million in expenses and payments. In addition to helping caregivers share, organize, and track expenses and schedules, the new offering also helps caregivers review and resolve disputes as well as maintain certified records of expenses and payment histories. These can be especially helpful for tax purposes or addressing legal issues that arise.

“We knew our platform could be of assistance to all family members, including the staggering number of caregivers,” Atwood said. “From our co-parenting solution, we know that when people share financial responsibilities – whether it’s with an ex, a sibling, or another family member – the process can be much more time-consuming, conflict-ridden, and stressful.”

Founded in 2018, SupportPay is headquartered in Charlotte, North Carolina. The company has raised $6.8 million in funding. SupportPay’s investors include LAUNCH and The Syndicate.

Photo by ELEVATE

6 Benchmarks TCH Reached Before FedNow Even Launched

6 Benchmarks TCH Reached Before FedNow Even Launched

By now you’ve likely heard that the U.S. Federal Reserve launched its FedNow instant payments solution. Using the new tool, banks and credit unions can enable their customers to instantly transfer money at any time of day, any day of the year.

The release comes 10 years after the Fed first started talking about creating a real-time payments (RTP) solution in 2013, and five years after it began developing an RTP offering. The Fed’s instant payments solution also comes after a handful of competing companies in the private sector– including Orum, Visa Direct, and The Clearing House (TCH)— had already launched.

The latter of these– TCH– just released an update that details some of the metrics it has reached in the instant payments realm after launching its RTP network in November of 2017. Here is what the company has achieved in six years:

Increased transaction number

The number of transactions on the RTP network in Q2 2023 totaled 58 million, up from 41 million transactions during that same period last year.

Increased transaction volume

The value of transactions during Q2 2023 reached $29 billion, up from $18 billion in the same quarter last year.

Gained financial institution customers

More than 350 financial institutions are providing real-time payments on the RTP network to their customers and members.

Gained business adoption

150,000 businesses are sending payments over the RTP network. This is a 50% increase since December 2022.

Reached end consumers

3+ million consumers each month are sending account-to-account payments and Zelle payments that leverage the RTP network

Reached demand deposit accounts

The RTP network currently reaches 65% of U.S. demand deposit accounts.

These milestones signify three things. First, they are a reminder to always question claims of “industry firsts.” The launch of FedNow is buzz-worthy because it is a government-led initiative, not because its the first player in the U.S. to enable real-time payments.

Second, TCH’s milestones indicate that consumers are not only conceptually ready for the change, they are open to trusting the process behind the change. “As more banks and credit unions join the RTP network, their customers and members are experiencing the benefits of real-time payments,” said TCH Senior Vice President of RTP Product Management Rusiru Gunasena. “Surpassing 500 million RTP payments signifies the accelerating growth and demand on the RTP network.”

The last thing TCH’s stats demonstrate is that there is still room for a lot of growth in this area. FedNow may not have been the first player to enter the market with an RTP solution, but that’s not to say it won’t be successful. There are currently 57 banks and credit unions planning to participate in FedNow, and Forbes estimates that number will increase to 200 by the end of the year and will reach 500 by the end of next year.

Photo by Hasan Albari

What Banks Can Learn from Toast’s 99 Cent Fee

What Banks Can Learn from Toast’s 99 Cent Fee

Point-of-sale (POS) and restaurant management platform Toast unveiled recently that it is rolling out a new fee. At only $0.99, the new fee doesn’t sound particularly problematic initially. Many of the technology provider’s customers, however, are not happy. And looking deeper into the issue, it’s easy to see why.

The fee

Toast is imposing the new fee to the end customers who make purchases of $10 or more on online Toast POS systems. The charge will appear under the “taxes and fees” line item. According to the Boston Globe, if a consumer clicks to see more information, they will see the charge listed as an “order processing fee” that Toast explains is “Set by Toast to help provide affordable digital ordering services for local restaurants.”

Circumventing their merchant client and charging the end consumer directly not only places strain on a restaurant’s business relationship with Toast, but it is also likely to strain the end customer’s relationship with the restaurant. Many have had to increase menu prices over the past few years because of inflation, and they have had to work hard to pay their workforce a competitive wage while not driving away customers with higher meal prices. Toast’s move is certain to exacerbate this.

There has already been much insight into why publicly listed Toast is doing this from a business perspective. The company has yet to become profitable and it’s stock price is down 61% since its 2021 IPO. With 85,000 merchants, Toast is sure to benefit financially from the new fee. Whether it will be enough to turn the company profitable is yet to be seen.

The fee doesn’t take effect nationwide until July 10, so the fallout is yet to be seen. So what can banks learn from this?

The lesson

Banks need to maintain tight control of the customer experience. With the “as-a-service” model taking off in banking, it makes sense that banks are leveraging third party technologies to create efficiencies and focus on their core product. There’s nothing wrong with using third party providers to help create a better user experience, build out a product set, or create a more secure environment. However, if there is a flaw that is the fault of the third party provider, it is ultimately the bank’s reputation that is on the line– not that of the third party.


Preventing the fallout of a rogue fintech partnership comes down to vetting the third party. It’s important that banks do their research by talking with other customers of the third party to garner feedback or run through customer scenarios to ensure optimal outcomes in all cases. Banks should also protect themselves by not locking themselves into a rigorous or limited contract.

Ultimately, banks are in business to serve the customer, and if a third party is ruining that relationship, it’s time for the bank to look elsewhere to suit their needs instead of sacrificing the customer experience.

Looking at Toast’s move, it’s difficult to say how (or if) the move will impact user behavior. When asked about potential customer reactions, Dustin Magaziner, CEO of PayBright, said, “I actually don’t think this will impact sales or customer relationships much. Many customers are accustomed to paying additional fees these days. However, I do think the angle to review this from is the lost revenue for the business owner. If a merchant runs 1000 online sales per month, it’s $1,000 the merchant is essentially not earning.”

Photo by cottonbro studio

7 Key Takeaways from FinovateSpring 2023

7 Key Takeaways from FinovateSpring 2023

I just returned from FinovateSpring, where I spent three days watching live product demos, listening to panels and keynote discussions, and shaking hands with new and old connections alike. As with all events, this one showcased new ideas. Unlike other events, however, this year’s FinovateSpring event signified a shift in the fintech landscape.

I’ve summarized this shift, along with other key themes presented, in seven key takeaways below.

Regulations are here

Pending regulations was a prominent topic at the event, extending beyond the crypto sector to include traditional finance. Despite many instances of regulatory oversight in the crypto sector over the years, last years’ FTX scandal was big enough to raise the red flag for regulators. Since then, traditional banks including Silicon Valley Bank and Cross River Bank have raised concerns about lack of oversight, and banking-as-a-service, respectively. Regulators are being held accountable, and their response to oversight issues is becoming increasingly important.

Fintechs and banks have shifted to consider regulation more heavily when and how they build products. Not only this, banks have also learned that they need to step up their due diligence before partnering with third party players.

AI is becoming table stakes

The integration of AI has moved beyond mere discussion and has become crucial for fintech firms. They now recognize the need to leverage AI across various aspects– including customer service, personalization, business intelligence, underwriting, and more– to stay competitive and meet customer expectations.

However, the good news is that it’s easier now than ever for firms to get involved with AI. We saw a few live demos at FinovateSpring that showcased accessible, no-code methods for firms to engage with AI. No developers? No problem.

The froth of 2019 is not coming back

The fintech industry has entered a new phase, and the environment of low interest rates and excessive fundraising we experienced from 2012 to 2019 is not sustainable. Firms must adapt to this new normal by focusing on unit economics and operational efficiency to ensure their survival, as down rounds and exits become more prevalent.

Things can only improve. Or will the slide continue?

On our Investor All Stars panel, the venture capitalists on stage expressed differing views on the market trajectory. Three out of four said that in their view, we are “bouncing around the bottom” of the downturn, and that things can only go up from here.

However, many folks I spoke with on the networking floor disagreed with the positive sentiment, and said they thought that the economy would see a downturn before things improve. Consumers are feeling the pain in their wallets, and the looming debt ceiling–as well as a spike in consumer debt– aren’t helping.

Beyond customer acquisition

Merely acquiring a large user base or having a unique product is no longer sufficient for fintech success. VCs and banks now require a clear monetization strategy and a focus on unit economics. Fintechs must demonstrate how their customer base supports their bottom line in order to attract investment and partnership opportunities.

Consolidation will continue

In both the banking and fintech sectors, we’ve seen an uptick in M&A activity. Some of these deals have been unexpected, like the case of Silicon Valley Bank’s collapse, for example. At the conference, there was much discussion about a potential shakeout in the fintech sector. Startups who are running out of funds and can’t renew a new round will either have to fold or be acquired. The neobank sector will also see a reckoning. Niche neobanks that have launched in the past four years will either have to find a way to mine value from an expanded user group or merge with like-minded fintechs.

Regulatory challenges with DeFi and crypto

Notably absent from the event’s discussions were decentralized finance (DeFi) and cryptocurrencies. In contrast to two years ago, when every session included a discussion about crypto, only a few presenters brought up the topic at last week’s event. The reason? Regulatory challenges.

Regulatory concerns have spiked due to the fallout from last year’s FTX scandal and other crypto collapses. Regulators fear loss of control with decentralized finance and lack understanding of the underlying mechanics behind crypto.

Photo by Pixabay

Small Move, Big Impact: Plaid’s API Migration Paves the Way for U.S. Open Banking Revolution

Small Move, Big Impact: Plaid’s API Migration Paves the Way for U.S. Open Banking Revolution

Financial infrastructure company Plaid made a relatively quiet announcement last week that will have a big impact on open banking in the U.S. The California-based company unveiled that it has migrated 100% of its traffic to APIs for major financial institutions, including Capital One, JPMorgan Chase, USAA, Wells Fargo, and others.

Taken at face value, this announcement appears to be nothing more than a fintech adding new bank clients. Looking deeper, however, there are three significant aspects of Plaid migrating its traffic to the banks’ APIs.

First, today’s move shows banks’ shifts in attitude toward open banking. Because the U.S. does not have regulation surrounding open banking, many U.S. banks don’t have the motivation to make consumers’ financial data open to third parties or don’t want to deal with the security implications that opening up consumers’ data to third parties may have. Additionally, in some cases, the banks do not want to make consumers’ data available to third party applications because the banks believe that they own the consumers’ data– or at least believe that they own the customer relationship.

The second significant impact of Plaid’s recent move is that it means that third party apps won’t need to rely on screen scraping to retrieve consumers’ data. The practice of screen scraping in financial services is less than ideal for multiple reasons, including:

  1. It requires consumers to share their bank login credentials with a third party, which may not have the same level of security as a bank.
  2. Since screen scraping extracts data based on the visual elements of a website, if the bank redesigns its website or changes the layout, it can result in inaccurate data retrieval.
  3. Screen scraping simulates user actions and requires a response from the bank’s website, which may slow the performance of the bank’s website, especially if multiple apps are screen scraping at once.
  4. Because screen scraping is essentially unauthorized access to a bank’s systems, the act of doing so may violate a bank’s terms of service.

As for the third impact– now that Plaid is working with the four aforementioned major U.S. banks to migrate traffic to APIs, it sends a signal to smaller banks, credit unions, and community financial institutions, which are more likely to follow suit. Potentially expediting the need for other financial institutions to jump on board, Plaid has also signed agreements with RBC, Citibank, and M&T, which will be migrating Plaid’s traffic to their APIs in the coming months.

“Our goal is to remove the need to rely on screen scraping in order for consumers to use the apps and services they want, and the momentum across our API integrations will help the industry get there faster,” Plaid Head of U.S. Financial Institution Partnerships Christy Sunquist said in a company blog post.

Despite the significance of this month’s announcement, there is still much work to be done. Some U.S. banks, such as PNC, are notorious for their unwillingness to work with Plaid, in essence taking a “closed banking” approach. Such attitudes may not prove beneficial in the long run, however, as many of the bank’s customers feel they are being shut out from essential third-party financial tools.

Photo by Jamar Penny on Unsplash

Twitter Needs these 6 Things to Become an “Everything App”

Twitter Needs these 6 Things to Become an “Everything App”

Ever since Elon Musk purchased Twitter last October for $44 million, he has been hinting of spinning the social media giant into what he is calling “X, the everything app.” In fintech, “everything apps” are known as super apps, and they exist primarily in Asia.

One of the latest developments in transitioning Twitter into a super app is Musk’s move to change Twitter’s name to X Corp. But a super app is much more than a name. Here’s a look at what the social media app currently offers, what it’s working on, and what it still needs to become a fully fledged super app.

What it has

Social is most certainly Twitter’s strongest attribute. The micro-blogging platform was founded in 2006 and currently has around 450 monthly active users. While this is a considerable user base, however, it pales in comparison to well-known super app WeChat, which counts 1.3 billion monthly active users.

Investment tools
Earlier this month, Twitter partnered with eToro to not only offer real-time pricing data for stocks, but also to facilitate trades. The trades, however, do not take place within Twitter’s interface. Instead, users are routed to eToro’s website for stock details and to make trades.

What it’s (publicly) working on

Generative AI
Last week, Musk unveiled a new company called X.AI, The move confirmed rumors of his plans to launch a generative AI product after he purchased thousands of graphic processing units. X.AI is expected to compete with OpenAI, which Musk co-founded in 2015 but left in 2018 to avoid a conflict of interest.

While most super apps do not boast their own generative AI tool, adding a powerful chatbot such as OpenAI’s ChatGPT would be a major differentiating factor

Musk is publicly vociferous about his plan to add Venmo-like payments capabilities to Twitter. And it’s not just talk. Twitter filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and is also in the process of obtaining necessary state licenses, as well.

After Twitter begins facilitating peer-to-peer payments, it may begin offering more digital bank-like tools such as a high-yield savings account or even an X-branded payment card. This leads the conversation into what Twitter still needs to become a super app.

What’s missing

Personal finance
Twitter already offers stock trading (through a third party) and it is working on offering peer-to-peer payments. There is more to personal finance, however, than just investing and spending. In order to truly become an “everything app,” Twitter must offer brick-and-mortar payments, as well as an in-app dashboard that helps users track their spending, savings, and investments.

This may end up being one of the most challenging aspects for Twitter to add in a way that would compete with the current top super app contenders in the U.S.– Walmart and PayPal. Currently, Walmart offers consumers access to goods from an Amazon-like supplier base, as well as to goods in their local Walmart store. PayPal’s shopping experience is less compelling, but offers deals from major service providers and retailers (including Walmart).

For Twitter to start a shopping experience from scratch wouldn’t be unfathomable, but it would take a long time. If it is seeking to compete with Walmart as a super app, it will likely need to find success via a partnership.

A few of the most well-known super apps– Grab, Gojek, and Ola– began as transportation apps. Adding transportation capabilities has the potential to draw users into the app on a daily basis because they not only facilitate commutes via ride-hailing or public transportation payments, they also facilitate hyper-local delivery, grocery delivery, and restaurant delivery. These aspects play major roles in the lives of consumers.

Health services
Amazon, Walmart, and others have tackled the fragmented healthcare industry. Providing affordable health services, such as appointment booking, tele-health calls, records management, and ask-a-nurse services in a single place provides a lot of value for end users.

Health services will not be a primary driver bringing users into Twitter’s super app, but it will certainly help to keep them around and may even help target the app’s older users.

Similar to adding health services, insurance tools will not serve as a primary draw for users. However, offering tools such as a digital lock box with insurance cards, contact information, coverage options, and payment history is a valuable add-on and can help reach older users not necessarily seeking social or payment capabilities.

Government and public services
To become a well-rounded super app, Twitter should add government and public services, such as public transportation payment and tracking, library cards, and tax preparation services. In the U.S. however, with the advent of FedNow and the potential addition of a CBDC, the government may end up beating Twitter to the punch with a super app of its own.

Photo by Possessed Photography on Unsplash