Legacy banks are often referred to as “dinosaurs”: they’re big (in the US have $20t in assets), slow (to innovate), on-premise (think vaults and aisles of servers), and smaller ones are facing the threat of extinction.
The “underbelly” of the beast is the core banking technology - for retail, this software allows banks to communicate across branches/ATMs, open and manage bank accounts, perform loans and payments, and operate their mobile banking platforms.
Most core banking software was implemented in the 1970s and 80s and has not been upgraded. While 70% of banking executives are reviewing their core banking strategy, only 5% of banks modernize their platforms each year, partially because the perceived risk of failure outweighs the benefits.
Banks spend about 1-3% of their assets under management on technology (over $500b a year) and half of that spend goes towards maintaining and developing the legacy core banking software. A move to a modern cloud-native banking platform can save up to 50% of those costs.
Last week, Thought Machine (a fintech startup building cloud-native core banking technology) recently won the JPMorgan Chase retail contract. That’s a platform that serves 57m customers. Chase will now (finally) have the ability to launch new products much faster than their (legacy) peers and compete in a fast-paced consumer fintech market.
No one else has quite replatformed at that scale. While banks are slowly starting to “get it” - they’ll have to move quickly if they want to avoid getting beat by fintech startups...
JPMorgan Chase moving retail bank's core system to cloud - JPMorgan Chase is deploying a new, cloud-based core system for its retail bank using software developed by Thought Machine, the two companies said this week. One of the main reasons for the move is to be able to innovate quickly to meet customers' ever-changing needs. Read more
Wells Fargo Embraces multicloud with Microsoft, Google deals - Recently, Wells Fargo has struggled with outages that have underscored technology failures from antiquated systems. The cloud initiative will allow the company’s technology team to build and deploy applications faster, which will benefit the bank’s customers. Read more
Mr Goxx, the crypto-trading hamster beating human investors - This lockdown side project is beating many professional traders and funds with a career performance of 19.41%. Say hello to the crypto-trading hamster. Read more
Bank mergers are on track to hit their highest level since the financial crisis - It is a sharp turnaround from last year, when the economy spiraled and many regional and community banks put merger plans on the shelf. Now, bank executives are feeling more certain about what the future holds, but some are finding it hard to make it on their own. Though the economy has in many ways recovered from 2020, loan demand is still low and profits from lending are slim. Read more
Will the next web be built on ethereum? - Interest in the ethereum blockchain has soared over the past year, as developers have turned to it to create a wave of decentralised finance projects, known as DeFi, and unique digital tokens called NFTs. The rise of new applications like these have already created what supporters claim is a powerful network effect, as increasing activity brings more and more developers to ethereum. However, nimbler rivals are emerging. Read more
After early investors flee SPAC deals, day traders rush in - Investor withdrawals were minimal early in the year as SPAC shares soared, but have risen with many blank-check companies trading below their listing price. For much of the summer, high withdrawals contributed to the sector’s malaise. Now, they are helping drive new interest in the sector, along with hair-raising stock moves. Read more
Inside the battle to be Europe’s Robinhood - Hordes of competing apps are betting on the ‘Americanisation’ of European share trading after the memestock frenzy during the pandemic. Read more
Zillow caught up in TikTok drama over big-money role in housing - A video posted by a real estate agent in Las Vegas — claiming a company was pulling off a convoluted scheme to manipulate housing prices — has gone viral. Read more
Bitcoin miners eye nuclear power as environmental criticism mounts - Bitcoin miners, under fire for their sizable environmental footprint, are forging partnerships with owners of struggling nuclear-power plants with electricity to spare. The matchups have the potential to solve key issues facing each industry, executives and analysts say: Electricity-hungry bitcoin miners want stable and carbon-free power, while nuclear plants facing competition from cheaper power sources need new customers. Read more
‘Salomon Sisters’ is coming to Wall Street, backed by Lazard - Wall Street is about to get a new investment bank, one that very deliberately shatters the glass ceiling. The firm, Independence Point Advisors, will be both owned and managed by women and minorities -- a rarity in an industry long dominated by White men. Read more
Paycheck deposits coming soon to Coinbase accounts - Beginning this fall, customers will be able to deposit as much – or as little – of their paycheck as they like. Account-holders can opt to get paid in any of the 100+ cryptocurrencies available on Coinbase, or in U.S. dollars, according to the announcement. Funds can then be used to make short- or long-term investments, generate interest on assets and cover expenses on the Coinbase Card. Read more
Aussie fintech teams with TikTok to allow trading of viral videos as NFTs - Under the plan, a selection of TikTok’s most popular viral videos will be auctioned to users in the form of NFTs. Fans will then be able to trade these videos, and the transactions will be facilitated by Immutable, a Sydney-based fintech that is attempting to take NFTs mainstream by slashing the cost of trading these digital assets. Read more
How minting a trillion-dollar platinum coin could avoid a constitutional crisis - More and more politicians are waking up to the fact that in an emergency, the Treasury could mint a trillion-dollar platinum coin in order to stave off a default on U.S. government debt. A default on U.S. Treasuries would likely be catastrophic, and so this “Plan C” is seen as an option to maintain financial order in the event that Congress fails to raise the debt ceiling in a timely manner. Read more
Biden administration seeks to regulate stablecoin issuers as banks - The Biden administration is considering ways to impose bank-like regulation on the cryptocurrency companies that issue stablecoins, including prodding the firms to register as banks. The administration is also expected to urge Congress to consider legislation to create a special-purpose charter for such firms that would be tailored to their business models. Read more
Google is scrapping its plan to offer bank accounts to users - Google is abandoning plans to pitch bank accounts to its users, marking a retreat from an effort to make the tech giant a bigger name in finance. The offering called Plex accounts was due to launch in 2020 but a series of missed deadlines, along with the April departure of the Google Pay executive who championed the project, prompted Google to pull the plug. Read more
Santander to shutter Wise rival PagoFX - PagoFX, the international money transfer service from Banco Santander that was built to take on the likes of Wise and Revolut, is to shut up shop on 30 November. Read more
Square teams with TikTok - Square and TikTok announced a new integration that will make it easy for sellers of all types and sizes to reach new customers and grow their sales online. Read more
AngelList returns to its founder-focused roots, with a twist - AngelList this week launched AngelList Stack, a new suite of products that will compete with Carta in providing services to help founders start, operate and maintain ownership over their companies. Read more
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