981. News: Bilt celebrates a big raise, Lloyds eyes Curve, and is JPMorgan killing fintech?

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1:14Hello and welcome to episode 981 of Fintech Insider. My name is David Barton, Fintech Strategy Director right here at 11FS. The Tour de France, one of cycling's most prestigious events, is still being fiercely contested in the hills of France. But the real race, at least for us, is happening in the world of fintech. Which stories will break away from the pack and make it into this week's podcast as the standout headlines? I love that. Joining me to decide which stories take the podium, our medal-worthy panel of experts. First up, we have a welcome fintech insider return for Jason McCooler, founder of Fintech Business Weekly.

1:50Welcome back to the show, Jason. Could you tell us a little bit more about what you've been up to since I spoke to you last, I think? trying to enjoy the beautiful summer here in Europe and seeing if I can get away with taking one of those all-August European vacations. It's looking very doubtful, though. God, I want that in my life. You know, like six weeks of, like, summer. Nothing. Well, welcome back, Jason. And next up, we have Julie Arnoux, Europe Commercial Head at WISE Platform. Welcome, Julie. Great to have you on the show. It's been a busy week for WISE, which we'll hear more about later.

2:24But firstly, could you tell us a little bit more about your role at the platform? Thanks for having me. So Wise is a technology company and we're building the best way to move money around the world, whether that's sending, receiving or spending. And Wise platform is basically the infrastructure that powers wise.com. And it also powers a number of banks and non-banks around the world. So, for example, some of our partners include Monzo and 26 New Bank, but also Morgan Stanley, Reif Eisen Bank, and Standard Chartered, just to name a few. So the TLDR is that basically banks can access the infrastructure, the payments infrastructure that WISE has developed over the past 14 years to improve their cross-border payments offering, always focused on the pillars that WISE is known for.

3:12So speed, cost, transparency, and convenience. and my role is basically to go out and promote our services to banks and help them improve their cross-border payments offering. Awesome. Welcome on board. And yeah, you've got some news to share, which we'll talk about in a little bit. And last but not least, we have Veronica Glab, independent fintech strategist. Welcome back, Veronica. What have you been up to since we spoke last? Well, for the most part, I think I'm going to have a similar summer to Jason. I'll also be spending most of my summer in Portugal enjoying a bit more sunshine than what I used to get in London.

3:47But I am going to be gearing up for Brazil Investment Week at the end of September in London. So it's not going to be entirely restful, but I'll definitely be practicing my Portuguese and putting together some really cool Brazil and Latam-themed content for the economy. Oh, so cool. Yeah, so I'm looking forward to hear more about that after the conference. I mean, so much is happening in Brazil, right? It's so interesting. All right. And that's our panel. Now onto the news. And this one is from the papers. JP Morgan reportedly intends to charge fintechs for customer data. JP Morgan is reportedly planning to charge fintechs for access to customer account data via aggregators like Plaid and Yodley.

4:29The fees vary by use case, but payments firms are likely to face the highest rates. This could add a potential revenue stream for JP Morgan of hundreds of millions of dollars a year, making a strategic shift to monetize data. Fintech stocks were reported to have dipped as the news broke, but analysts suggest it will have a limited long-term impact. JP Morgan has defended the move, claiming they are making investments in secure infrastructure and ecosystem-wide security standards. So yeah, I remember when this broke, and there was a lot of, I think, trauma. A lot of people panicked. There was like mass panic in the market.

5:07Jason, I'm going to come to you first. So what have you seen come out of this? Okay, I promise I will keep this relatively brief, but it is important to back up and set some critical context right, which is that the Consumer Financial Protection Bureau, the CFPB, finalized the U.S.'s open banking rule, commonly referred to as 1033, just last October. That rule would require covered institutions, which would include JPMorgan Chase, to make data available at no cost for certain kinds of accounts. Specifically those covered by Reg E, which are checking and savings type accounts, Reg Z, credit card accounts, prepaid accounts, and digital wallets.

5:48Now, the very same day that rule was finalized last October, a trade group, the Bank Policy Institute, which represents some of the country's largest banks, filed a lawsuit arguing that that regulator, the CFBB, had exceeded its statutory authority, including by prohibiting banks from charging fees, and that it formulated the rule in an arbitrary and capricious manner in violation of the Administrative Procedures Act. So this move from JPMC, from Chase, isn't coming out of nowhere, right? There's a backstory. And perhaps more importantly, in this lawsuit, the CFPB, keeping in mind that lawsuit was filed last October during the Biden administration, under its new acting director, Russ Vaught, the CFPB quite literally changed sides in that lawsuit and is agreeing with the Bank Policy Institute and the other two.

6:47plaintiffs that are seeking to overturn the rule and has asked the court to vacate the open banking rule. Now, this case hasn't actually yet been decided. A different trade group, the FTA, which represents fintechs, was granted the right to intervene and argue in favor of preserving the rule, right? So that case is still pending. That's sort of like the backstory here. As far as the specific move, I'm not sure that I agree that the move from Chase here is actually about generating revenue from the data so much as I think is about using Chase's mammoth market power to undermine potential competitive threats, particularly, as you alluded to, in payments related businesses.

7:32In the U.S. case, you know, pay by bank. Sources that I've spoken to who have seen the proposed pricing described it as, quote unquote, punitive and literally an effort to kill off an entire industry. So it isn't just about cost recovery. It's about pricing this open banking data in a way that may make competing with Chase or offering products or solutions that compete with Chase just unviable given the economics. Wow. That is way bigger than I thought. I mean, Veronica, what do you think about this? So, I mean, there's two angles there that I looked at sort of short term and longer term. And, you know, if Jason takes the regulatory side, I really look at it from an innovation and investment side as well.

8:23Short term, if you're monetizing data, that might be great for JP Morgan. But what I would be really concerned about is how early stage fintechs are going to pay for that data if they need certain types of data to continue building new products and features. So I would hate to be a VC and see, you know, a Series A company coming to me and saying, okay, well, we've now got to rebudget our burn rate because we've got to purchase this data that we are now dependent on in order to build our next rollout, our next product, our next feature. Maybe that's part of JP Morgan's strategy here is to choke off a little bit of that competitive innovation.

8:59but I've also kind of got my own conspiracy theory soapbox here that this, from an innovation angle, this could be sort of the first horseman of the really, really historic legacy banks having, bringing fintech into a moment of reckoning. We've always talked about fintech being more agile, more innovative, just faster, smarter, cleverer but what fintechs, companies that are under 15 years old do not have is centuries of historical data. So this is the first really big case we're seeing of a major legacy bank like J.P. Morgan leveraging historical data. This bank was set up in 1799. It's the original Wall Street Bro bank, Alexander Hamilton, using it to supply Manhattan with water.

9:48Dig into it. I'll try to keep this a little bit short. But if you talk about a bank like J.P. Morgan who have this very tech forward strategic angle about their future as a bank. Or maybe it's a Santander or a Coots bank who have literally centuries of historical data of end customer usage and behavior, macroeconomic data as well, recession data from decades and decades and decades. There's banks out there that are almost as old as the bubonic plague. Imagine if they actually start monetizing that of developing their own LLMs to process that data into narrative and strategy. So without going too deep into that sort of wormhole there, I think this first real strategic monetization of data says a lot more than just making cash off of a product, but it's really banks leveraging centuries of what has already been always theirs.

10:46Yeah, and it sounds like this is like the opening firing gun of this. I mean, just echoing what both of you are saying, I mean, certainly one of the meta themes that I've been hearing from bankers over the last decade is, oh, this is very great, but someone has to pay for this. Like, we are covering the cost of this infrastructure, and somehow, at some point, there is going to have to be a reckoning. And yet, the entire open banking ecosystem, and therefore, by extension, a portion of the fintech ecosystem, is based on the assumption that there is this open data. So there is this, both of you are saying, there is this kind of arbitrage between those two very different point of views.

11:23It is absolutely terrifying. And it's an international ramification. So Jason, this is a US-focused charge, right? Is this not, I needed to check into it a little bit more, whether this is global or whether this is just the US. Yes, it is specifically referring to the US and specifically referring to consumer accounts at Chase. So that would, full disclosure, I actually am a Chase customer, but that would be, you know, checking account, savings accounts, credit card accounts. You know, I do think it's worth clarifying that the way that this ecosystem works in the U.S. today, you know, you mentioned some of the aggregators.

12:03So companies like Plaid, like MX, like Finicity, those companies generally build the integrations with the banks, the credit unions, other financial institutions. It's also worth remembering that the United States has something like 10 ,000 banks and credit unions. So the idea that, you know, Wise or any other fintech company would go and build 10 ,000 integrations and every single fintech that wants access to consumer banking data would likewise build their own 10 ,000 integrations, you know, it's just sort of like ludicrous on the face of it. Like there is a real value-add role that the aggregators like Plaid, like MX, like Finicity play.

12:47I think the challenge, and you make a fair point, and I think, you know, Jamie Dimon surely would agree with you, that the underlying banks, Chase included, do have to spend real money to build and maintain those APIs that aggregators plug into. So, you know, I think there is a real question of who bears that cost and how is that cost distributed. You know, if you look at something that is somewhat analogous, which is the debit card space in the United States, when Dodd-Frank was passed in the wake of the financial crisis, part of that was the Durbin Amendment. We're most familiar with this talking about banks that are exempt from it, but banks that are covered by the Durbin Amendment, like JPMorgan Chase, the amount that they can charge on a debit transaction for interchange is regulated.

13:41And that formula to compute how much the banks are able to earn is designed to facilitate cost recovery. Basically, what is the actual cost of providing this debit card service and allowing the interchange rate as a cost recovery? So this is not, you know, this is not how the discussion around open banking data has evolved in the U.S. But I do think there is a legitimate question of, hey, if you're Chase, if you're Bank of America, if you're Wells Fargo, building and maintaining those APIs, securing customer data, that really does cost money. And so you can understand why the financial institutions would want to at least be able to sort of break even or recover that money.

14:27That's not what is happening here. You know, I haven't actually seen a full copy of the pricing sheet, but the way it has been described to me from people who have seen it, particularly for payments use cases, is that it is just prohibitive to the point where you would not actually be able to build a business off the back of it. Now, I think it's also worth remembering, like, what are the things that open banking data enable? You know, we tend to talk about it at this sort of like 30 ,000-foot abstract level. But since we have someone from WISE here, and I'm apparently like a WISE power user, you know, one of the things that open banking data enable is this monitoring of account data to underwrite credit risk.

15:17In the Wise case, that's doing something like saying, hey, I want to send$200 from my Chase account to, you know, Mexican pesos to my friend. If you want to have that look and feel instant, Wise needs to be sure that you actually have that money and that you didn't just open up that account yesterday. And when that ACH debit hits, it's going to bounce back and say, oh, Jason actually scammed you. He doesn't have any money. Similarly, using open banking data for cash flow underwriting of consumers who don't have credit scores or linking their bank account to services like Venmo and Cash App. So there are real consequences should this data become either unavailable or just economically impractical to use.

16:02And as the walls go up, and if those walls go up consistently, if all of the other incumbents, then before you know it, the whole economic model of fintech begins to kind of disintegrate in some ways, which is a little bit terrifying. Unfortunately, we are out of time on this, but I mean, I suppose we could dedicate an entire podcast. This is so fascinating. And I guess much needs to be seen of what actually happens to this lawsuit or regulation as time goes by. so I'm sure we'll be talking about this again in no time. Right, and this next one is from Fintech Finance News. Unicredit becomes first major bank in Europe to launch fast, secure foreign currency payments through partnership with Wise Platform.

16:43Unicredit has become the first major European bank to integrate Wise's payment platform, launching fast, low-cost FX transfers directly in its app. The service will be available from July the 21st, 2025 for Italian retail customers with more currencies to come. Transfers are near instant, often taking just a few seconds with fees up to 80 % lower than traditional international payments. WISE provides the infrastructure, giving access to 90 plus local banking networks, 70 plus licenses, enabling Unicredit to bypass slow correspondent banking systems. So Julie, we obviously have to come to you first on this.

17:18Tell us a little bit more background behind the partnership. How did it come about? And what makes this a European first? Cool. So I guess just setting the scene a little bit on why Unicredit would be interested in partnering with Wise. In the past, I'd say decade, probably 15 years, we've seen a lot of new banks and also non-banks kind of enter the market of financial services. and they're offering really, really compelling products to consumers. And so naturally, consumers who used to, you know, only have one bank account with their bank and, you know, just go to their services for absolutely everything, they're kind of now like shopping around and looking for the best service out there.

18:03So they're looking for the best price. They're looking for the best quality service. They're looking for a great user experience. And so there's a reality today where we're seeing, we're seeing like people have a lot of different apps, a lot of different providers for a number of different services. If I look at this personally, I used to have a bank account in the UK where I live, a bank account in France where I'm from, and that was basically it. Today, I have like 10 different apps, right? I have Wise for my cross-border payments, I have Nutmeg for my investments, etc. And so the issue that banks are kind of feeling now is that customers are churning on specific products.

18:44So for example, in our world, we see customers leaving their bank because they're not really satisfied with the quality of the service and the price of their cross-border payments. And so they're going to other services likewise, but like other providers out there too. And once, you know, as a consumer, once you've downloaded a new app, you've gone through the KYC just for this one service, you're likely going to spend a little bit of time in the app kind of checking out what are the other services that I could use with this new provider. And so what banks kind of started feeling is there's churn on this one specific product, which is kind of like trickling down to churn on other services.

19:27And so customers are leaving them for cross-border payments and then slowly also leaving them for cards and day-to-day banking and all these other services that banks really, really care about. And so banks need to react really quickly to this in order to keep customers within their ecosystem. And that's exactly what Unicredit have decided to do. They've really invested into payments in general over the past few years and now more specifically into cross-border payments because they want to keep their customers happy within their ecosystem And they want to make them more sticky with just an excellent level of service for cross-border and for payments in general.

20:09So with WISE, of course, they're focused on how do we charge the lowest possible fees for payments? How do we offer instant payments? Instant for us means less than 20 seconds. I can send money from the UK all the way to Brazil in less than 20 seconds end to end. They're also interested in transparency. So how are we transparent in terms of the fees that we're going to charge the customer, but also throughout the experience of the transfer? How can I at any point of time look at the status of my payment or what's going on with my payment? So really pushing that level of transparency throughout the customer journey.

20:49And of course, a really strong user experience. Today, we're really used to doing everything with like a few taps on our phone. It needs to be the same for cross-border payments. and so cross-border payments is really a strategic initiative we're seeing a lot of banks do this now in Europe actually to keep your customers within your app and to kind of push back the threat a little bit of these banks and non-banks that have entered the market in the past 10 years That's awesome and can you tell us a little bit about what makes it a European first is that like a first for WISE or is that like for this particular product set?

21:27Kind of both, to be honest. It's a European first because it's the first major bank in Europe that leverages Weiss Platform. So first kind of for us and kind of for European banks too. And what's super exciting is they're rolling out this new service next week to 15 million customers. And it's also a first, if I can just add a little bit there. traditionally banks when they set up their their infrastructure to to make international payments they use correspondent banks right so it's a big chain of like a number of different partners that allows you to move money literally from point a to point b so it's super exciting to see a bank of like the size of uni credit kind of change completely this the traditional setup that they're used to with these services and rely on and leverage basically the and the payments infrastructure wise but also our technology and our expertise within within cross-border cross-border payments it's very very cool and i love that background that you gave you know around the sort of threat of of fintech and challenger banks eroding you know customer trust and stickiness at 11fs that we also see the same fear and the same kind of stats coming through from banks.

22:47So it's very interesting. Veronica, would you echo this as well? Are you seeing that the incumbent banks now really pay attention to maybe solving some of these, I mean, they're product issues, but they're also UX issues, right? I guess FX in some ways is also a UX problem, right? Yeah, I think the UX piece for me is actually quite interesting as well. I always love a cross-border payments story because I am also someone, I grew up in the remittances economy. So every time that you make that user experience better, you could be relieving one customer of massive anxiety around an urgent payment that has to be made.

23:27But when you put that at scale, particularly in any European market where people are actually really quite mobile, it's super exciting to see. So the UX piece, the faster you can make that payment is one thing, but also the better that you can make the user experience, it genuinely does, at scale, make a massive difference in customers' lives. Absolutely. Jason, what's the big partnership story here? I mean, Wise is a fantastic example of a business that has platform-tized. I don't know, I just made that word up. I'm sure there's something better here. And it's definitely a thing that you see in FinTech, launching a product and then launching a technical solution or a platform and then, you know, sort of scaling through that area.

24:13Are there any kind of headwinds in that model or do you see that just continuing to expand? I mean, I think, you know, one of the challenges is FX and international payments remains a highly profitable business for banks because of all of the friction and the lack of transparency that Julie's talking about. I mean, as she was describing that, you know, I live here in Europe, so live most of my life in euros. I'm American. I also run a small business in Mexico. And I can tell you both the UX on the bank I use in Mexico, which shall remain unnamed, and I've done the math on the foreign exchange rate.

24:56And they don't make it clear that you're eating, you know, hundreds of dollars, obviously depending on how much you're sending, in dollars or euros that are baked in to the foreign exchange rate that they're giving you, right? So if I'm a major bank that sees foreign exchange and international payments as a huge revenue driver and profit center, why would I want to adopt something like Wise Platform, which maybe is a much better experience for my customers, but it's eroding that revenue that the bank is generating? And I think that that's true across a lot of different product lines. So it's like you end up getting what Julie is describing, which is all of these point solutions, which is like, oh, well, you know, whatever.

25:42I bank with Santander, but like these four features are either the UX is bad, they're too expensive, it's hard to use. So I'm going to go adopt wise. I'm going to go adopt, you know, Robinhood or some other capability because the ones that are sort of bundled in to my core banking experience are just bad. And on the one hand, maybe that solves that specific pain point for that individual consumer, but now they have a different challenge, which is managing 5, 10, 15 different apps for all of these different tasks, all the different jobs to be done. So, I mean, I think, like I said, I actually am like a wise power user because of my weird distributed life.

26:26And it solves a real pain point for me that, you know, Chase or my Mexican bank account or my European bank account don't solve. Yeah. Yeah, I know. Julia, I'd love for you maybe just to pick that up because what Jason said there was very interesting, like those trade-offs, right, between an amazing UX experience. but also in some ways you know losing losing that revenue if you know wise is claiming the transfers are up to 80 % cheaper than how does unit credit or a or another partner benefit financially i think what they need to remember is if you don't make this change to improve price and so the user experience um your customers have already decided to leave you and will keep doing this right and so you're not just you're already losing today on the revenue that you were previously making on cross-border payments because competition is now really high in the market.

27:18And next to that, you're losing customers on these other products that you really, really care about because that's actually like where most of your revenue is generated, right? Like day-to-day banking, credits, mortgages, like Wise doesn't offer these things, but we know other challengers that do and that will keep, you know, pushing all of the boundaries of all of the different product, bank products that they can offer today. So it's kind of the trade-off between, I don't think there is a trade-off. It's this or you've lost your customers and the revenue anyway. It's becoming a no-brainer these days.

27:51This is just something you're going to have to do. No, that makes sense. Thanks for that. And on that note, we're just going to take a quick pause here. Back shortly.

28:02Fall is the perfect time to refresh and reorganize your space. At the Home Depot, find power tools and tool sets starting at$50 to help tackle DIY projects, home updates, and more. Whether you're drilling brackets to support new shelving or sharpening your hedge trimmer blade with an angle grinder, The Home Depot has the tools you need to check projects off your list. Shop Labor Day savings at The Home Depot and gear up for fall projects with the right tools to keep your projects moving. Hey, Chicago. Class it up with Crocs. You know back to school is coming in fast. So why wait to find your new fave footwear?