Overdraft fees are a massive revenue source for banks. In 2017, UK banks pulled in £2.4b ($3b USD) from overdrafts. In the U.S., banks with over $1b in assets collected $11.5b in overdraft and non-sufficient funds (“NSF”) fees. All 10 of the nation’s largest banks charge overdraft fees in excess of $30.
However, regulators in both countries are looking to reform this practice. In the U.S., senators Cory Booker and Sherrod Brown introduced legislation to crack down on overdrafts. The “Stop Overdraft Profiteering Act” would ban overdraft fees on debit card and ATM transactions, while also limiting fees stemming from checks and recurring payments.
The UK’s Financial Conduct Authority is going even further with a massive overhaul taking affect in April 2020. Banks will no longer be allowed to charge fixed daily or monthly overdraft fees at all – and must instead charge a simple annual interest rate. Bank materials and overdraft advertisements will need to clearly state the interest rate, with no hidden costs.
According to the FCA, the average cost of borrowing £100 through an overdraft would drop from £5 a day, to less than 20p.
Though these regulations still need to play out, one thing is clear – government officials want to give unfair overdrafts a proper sendoff…
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MoneyLion featured by Yahoo Finance - Portfolio company MoneyLion was featured as "one of three of our favorites" in an article featuring attractive low-cost banking options for this summer. Read more
Fintech female Fridays: Gabrielle Haddad – Portfolio company Sigma Ratings’ Co-Founder & COO recounts her early professional story, letting go of what her career was "supposed to be", and her learnings and challenges to-date leading an AI tech company focused on building the world's first non-credit rating agency. Read more
Cybersecurity company Glasswall Solutions appoints Danny Lopez as Chief Executive Officer - FinTech Collective special advisor Danny Lopez has been appointed CEO of cybersecurity company Glasswall Solutions. Based in London, Danny will continue to support FinTech Collective. We wish him all the success in the world. Read more
Bank overdraft fees targeted in major shake-up - In 2017, UK banks made more than £2.4bn from overdrafts - with 30% alone coming from "unarranged" overdrafts. The UK financial regulator is now forcing a major shake-up - the biggest overhaul in a generation. Read more
A $100m ICO being sued by the SEC wants more of your money - Last week, the “foundation” behind Kik, the company that raised $100m in an ICO in 2017 for the “Kin” token, set up a new website: www.defendcrypto.org, to help raise money to take on the SEC. The FT's Alphaville have found some wags who have set up an alternative site called www.defundcrypto.org. Read more
JPMorgan scraps new app service for young people - Chase, the USA's largest commercial bank, began shutting down Finn, the no-fee banking brand designed to meet the financial needs of younger consumers. Read more
SoFi loses three top executives - Three top executives from SoFi are leaving the firm in the coming weeks, adding to the challenges that the company faces as it moves through a tougher environment for online lenders. Read more
Square sends millions of digital receipts, sometimes to the wrong person - As reported by the WSJ, Square has been sending receipts to the wrong people, revealing surprise gifts to pending divorces. Read more
Digital Asset Holdings pivots to focus on "smart contracts" - The FT reports that Blyth Masters’ grand plan to apply blockchain technology to the world of securities and trade settlement appears to be stalling, with DAH pivoting to focus on “smart contracts”. Read more
Expectation building on FinTech IPOs - The ten most valuable FinTech companies in the world are mostly 6-10 years old, with hundreds of millions raised, and multibillion-dollar valuations. Yet, not one of them seems particularly close to an offering. Read more
Square strengthens POS system to integrate Postmates, DoorDash, and other food delivery services - Looking to eliminate “tablet farm” scenarios in restaurants, Square has announced a host of new integrations to help centralize their ordering, delivery, and payment processing into a single interface. Read more
Biz2Credit - New York based online lending platform has raised $52m of Series B funding, led by WestBridge Capital. Read more
CellPoint Mobile - London-based provider of digital payment solutions for airlines has raised £11m of additional funding from Toscafund Asset Management (managed by Penta Capital). Read more
Crowdz - San Jose based trade finance startup has raised $5.5m in Series A funding, co-led by Barclays and Bold Capital Partners. Read more
Halo Investing - Chicago based platform that provides structured note investments has raised $12m in Series B funding, led by Allianz Life Ventures. Read more
Grasshopper - New York based startup-focused bank has raised $100m+ from a group of investors, including T. Rowe Price, Patriot Financial and Endeavour Capital. Read more
Getsafe - Heidelberg based insuretech startup targeting millennials has raised $17m (€15m) in Series A funding, led by Earlybird. Read more
Possible Finance - Seattle based subprime consumer lending startup has raised $10.5 million in venture funding, led by Canvas Ventures. Read more
Step – San Francisco based teenager-focused mobile banking startup has raised $22.5m of Series A funding, led by Stripe. Read more
Synapse - San Francisco based developer of APIs for financial services has raised $33m in Series B funding, led by Andreessen Horowitz. Read more
Tink - Stockholm based open banking platform has raised $11.2m from PayPal. Read more
TrueLayer - London based open-banking platform has raised $35m of funding, led by Tencent and Singaporean sovereign wealth fund Temasek. Read more
WorldRemit - London based money transfer startup has raised $175m of Series D funding at $900m+ valuation, led by TCV, Accel and Leapfrog Investments. Read more
FinTech Collective Newsletter
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