The Grizzly Giant Sequoia, Mariposa Grove, California by Albert Bierstadt.

3 FINTECH NEWS STORIES

#1: Finally! 

What happened?

The credit bureaus have reportedly cut off TomoCredit from furnishing data:

Experian, TransUnion and Equifax, the three major credit bureaus, have all ended their data partnerships with TomoCredit, refusing to include credit lines reported by the troubled San Francisco startup, Forbes has learned. TomoCredit claims it can help boost consumers’ credit scores through features like opening a line of credit for them and reporting their rent and utility payments to the credit bureaus.

So what?     

Finally!

Despite a general policy to not comment on the status of any particular furnishers, Equifax made an exception for Tomo:

An Equifax spokesperson confirmed that the company has “deactivated TomoCredit from our system.” The spokesperson also said, “Equifax carefully reviews all requests from prospective data furnishers to furnish data as well as regularly audits current data furnishers for quality, compliance and security.”

This reminds me of the scene from The Social Network when the Harvard Ad Board accuses Mark Zuckerberg of breaching the security of the university’s computer network, and the head of security for the network brags that its sophistication led them to catch Zuckerberg in less than four hours and Zuckerberg retorts, “that would be impressive, except if you’d know what you were looking for you would have seen it written on my dorm room window.”

I wrote the story of Tomo’s furnishing misdeeds on my dorm room window one year ago. Jason Mikula did some incredible reporting between then and now, including his most recent scoop about Tomo being sued by Silicon Valley Bank. And Jeff Kauflin at Forbes has been doing some great recent reporting on Tomo, including this story. 

Tomo’s problems have been an open secret for a while now, so I’m not overly reassured by Equifax’s claim that it “regularly audits current data furnishers for quality, compliance, and security.”

The credit bureaus are critical infrastructure. We need to have a larger conversation about how good of a job they’re doing regulating access to that infrastructure.

And regarding TomoCredit, I sincerely hope this is the last time I write about them. 

#2: Ramp Tries to Split the Difference

What happened?

Ramp has launched an app store:

Ramp, founded in 2019, has earned its $7.65 billion valuation by working to make the universal agony of expense reporting less painful, and by expanding to include bill payments, procurement, and travel management. Now, [Eric] Glyman [Ramp’s CEO] is taking things to the next level: Ramp is launching its very own app store, Fortune has learned. The Ramp App Center, which goes live today, will let third-party developers build specialized apps that integrate directly into Ramp’s platform, while providing Ramp customers with a central hub to browse various add-ons.

So what?     

I’ve been writing a lot lately about the shift towards modularization and best-of-breed solutions in B2B fintech. Recent examples abound of B2B fintech companies, in pursuit of larger enterprise customers, pivoting away from their roots as tightly integrated all-in-one platforms to more open, interoperable platforms. Navan. Brex. Stripe. You name it. Everyone is doing it.

Except Ramp.

Ramp appears to believe, understandably, that its tightly integrated all-in-one platform offers such a superior solution to its customers’ spend management and finance operations needs that it doesn’t need to play this game.

The whole is greater than the sum of its parts.

I have been wondering how long this strategy would last, given the demonstrated preference that large enterprise companies have for assembling their own best-of-breed stacks. 

The launch of the Ramp App Center makes me think Ramp is trying to split the difference — continue to win through a tightly integrated all-in-one platform but bring a flavor of modularity through the integration of third-party “apps” (which Ramp is not taking a revenue split on) in order to satisfy larger customers that are looking for a little more extensibility.

I’ll be curious to see how this Apple-like strategy for B2B fintech works out.  

#3: An Open Banking Command Center

What happened?

Mastercard is launching a new open banking tool:

Mastercard introduced a tool that lets consumers control the sharing of their financial data.

Connect Plus is a “data command center” that lets consumers determine how, where and with whom their data is shared …

Connect Plus lets users search for and link their bank accounts, see which third parties have permission to access account data, and grant and revoke consent in real time, the release said. The tool also notifies consumers when a third-party’s permission to access account data is expiring or needs more attention.

The company is piloting Connect Plus this year and plans to expand to full availability in the United States next year

So what?

Under the CFPB’s Personal Financial Data Rights Rule (recently finalized!), consumers need to have a mechanism to manage the sharing of their financial data with third parties and to revoke access to that data if they wish.

Everyone in the industry is clambering to provide that mechanism. Data aggregators (Plaid already offers this and now Mastercard is launching it). Banks (many big banks offer this type of command center functionality within their mobile apps). Even fintech companies are starting to get into the game (this is a very natural extension for a neobank or a PFM app).

The challenge is that this mechanism doesn’t have a single obvious home.

Some consumers do almost all their banking with one financial institution. For them, getting a command center to manage financial data sharing from their financial institution makes all the sense in the world.

However, for consumers with more diversified financial lives (this is increasingly the norm for consumers, especially younger consumers), getting this functionality from each of the financial institutions that they work with would be a much more cumbersome experience. Getting it from a data aggregator instead might make more sense, although that assumes that all of the third parties that the consumer is sharing data with use the same aggregator, which probably isn’t a safe assumption.

To be honest, I’m not sure what the best answer is here. It almost feels like we need the consumer-facing version of a super aggregator that can pull all this functionality into a single, unified experience.

However, until that happens, expect to see a lot of competition from banks, aggregators, and fintechs in this area.


2 FINTECH CONTENT RECOMMENDATIONS

#1: News You Need To Know Before Money2020 (by Jason Mikula, Fintech Business Weekly) 📚  

Lots of great updates here, including the CFPB’s enforcement action against Apple and Goldman Sachs, the BPI’s lawsuit against the CFPB, Synapse, and SoLo Funds. 

#2: Are We Getting Steak or Sizzle from Government Actions on Payments Competition? (by Matt Janiga, Open Banker) 📚

Spicy stuff from the preeminent skee-ball player in fintech, Matt Janiga.


1 QUESTION TO PONDER

What is the most interesting thing you learned, heard about, or saw at Money20/20 this week?

I’ll be doing a roundup of interesting news for this Friday’s newsletter, and I’d love to get your takes. Bonus points if you avoid talking your own book.

Alex Johnson
Alex Johnson
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