#1: Just Play Nice!
What happened?
PNC is playing nice(r) with the open banking community:
The PNC Financial Services Group and Plaid have entered into a bilateral data access agreement that will enable PNC customers nationwide to more safely and securely connect and share financial data to their chosen financial applications through Plaid. PNC uses Akoya as its API service provider to provide PNC customers’ financial information to all data recipients.
“Through this new partnership with Plaid, PNC customers will be able to achieve greater data security, privacy, and control while using the third-party financial apps and services they enjoy,” said Natalie Talpas, executive vice president, Digital and Payments at PNC. “PNC’s use of its Akoya-provided API allows for all data recipients, including Plaid, to get connected fast, while also enabling customers to reliably control what financial data they are permissioning without having to share their login credentials with third parties.”
So what?
This conversation didn’t happen, but just for illustrative purposes, let’s imagine that Rohit Chopra, Director of the CFPB, cornered Bill Demchak, CEO of PNC, at a deli in Pittsburgh earlier this year:
Chopra: Look, this plan that you have to force everyone who wants to access your customers’ data to go through Akoya isn’t going to fly.
Demchak: But screen scraping is bad! And Akoya doesn’t screen scrape!
Chopra: PNC is one of the owners of Akoya! This is blatantly anti-competitive! And we’re gonna fix the screen scraping thing with 1033. Just play nice.
Demchak: No, I don’t want to.
Chopra: OK, don’t tell anyone I said this to you, but open banking is good for you. It’ll enable you to pull deposits out of smaller banks and compete with Chase and BofA without having to build a ton of new branches.
Demchak: Hmmm.
Again, this conversation definitely didn’t happen. But someone clearly talked to Mr. Demchak because PNC’s approach to open banking has changed dramatically over the last year.
#2: The Apple of Chase’s Eye
What happened?
JPMorgan Chase is considering taking the Apple Card off of Goldman Sachs’ hands:
Landing the deal would expand Chase’s card business— already the biggest in the country—while bringing along a loyal base of Apple customers to whom it can pitch more financial products. Apple, meanwhile, needs to find a new home for its credit card, which has over 12 million users, after Goldman decided to abandon its push into consumer finance.
So what?
It’s not a done deal yet, and the main sticking point (as expected) is that JPMC isn’t willing to pay the price for Goldman Sachs’ stupidity.
This includes JPMC not paying full freight for the outstanding balances:
The team at JPMorgan negotiating the deal wants to pay less than the full face value of the roughly $17 billion in outstanding balances in the Apple credit-card program, the people said. Credit-card portfolios often sell at par or for a premium to the total loans, while accounts that have high delinquencies or some other flaw can sell at a loss.
Apple’s current program has both subprime exposure and terms associated with it that could be costly to take on for any issuer.
As well as JPMC not carrying over some of the “innovations” that Apple forced Goldman to enable:
JPMorgan also wants to do away with parts of the card program, including Apple’s requirement that all cardholders receive their statement at the beginning of the month, the people said. This unusual billing structure created customer-service issues for Goldman and, in turn, contributed to regulatory scrutiny of the bank’s consumer-lending business.
Goldman tried more than once to persuade Apple to change the billing date, according to people familiar with the matter. Apple has signaled that it is open to making this change for JPMorgan.
Apple’s willingness to accede to JPMC’s demands indicates two things to me:
- Apple knows that it’s not going to be able to get any issuer to sign up for the deal that Goldman signed up for.
- Apple is less focused on maximizing the competitive differentiation of its own credit card as it seeks to reset its relationships with banks and fintech companies and embrace more of an ecosystem/partnership-oriented approach to financial services moving forward.
#3: Brex Embraces Modularity
What happened?
Brex is launching an embedded payments solution:
Brex … today announced Brex Embedded payments – a new API-driven payments solution that makes it easy for B2B software vendors to accelerate customer workflows with Brex virtual cards.
Brex Embedded leverages proprietary APIs and issuing integrations—including Mastercard’s innovative virtual card platform—to enable any software vendor to seamlessly integrate Brex’s global corporate card and payments capabilities directly into their platform, without the overhead of underwriting, onboarding, and credit risk. For Brex Embedded partners, their customers can make fast, secure global payments in virtually any currency, all while automating their existing financial workflows and payment reconciliation.
So what?
This is very interesting.
As I wrote about recently, B2B fintech providers are being forced to embrace modularity as they scale up from serving startups and small businesses (which want all-in-one platforms) to large enterprise customers (which want flexibility and best-of-breed capabilities).
Brex is clearly on that journey (the company describes itself as “the corporate card and spend management platform for startups and enterprises”), and this new offering is obviously aimed at making Brex more competitive with larger companies, which may like Brex’s card but not its expense management, accounting, or travel capabilities.
Brex’s decision follows on the heels of Navan adopting a similar strategy, but in reverse — bring your own card (BYOC) — as well as the modernization of large banks’ corporate card infrastructures, which I wrote about in this essay.
Ramp is now, in some ways, the odd one out. The company offers a compelling combination of spend management capabilities, all wrapped around its corporate card. Will its whole-is-greater-than-the-sum-of-its-parts magic be enough to win over larger enterprise customers? Or will it be forced to embrace modularity as well?
