The big takeaway: In the competitive landscape surrounding financial services—now crowded with fintechs, Big Tech, and nonbanking brands making innovative use of tech—JPMorgan’s prioritization of tech updates is necessary for it to add and retain users.

Fintechs, Big Tech, and neobanks will give consumers more control with AI and real-time data to automate financial journeys. In the coming year, FIs and fintechs will focus on building products and services that address financial and social equity. Vanguard will acquire at least one wealthtech provider as it pushes deeper into personalization.

Green Dot claims that getting underserved people engaged with fintech products creates a virtuous cycle, pointing to a 2021 Plaid survey which found that 71% "say the more they use Fintech, the more confident they feel about their finances." The company says this helps create demand for platforms with secure open banking offerings.

FIs need to upgrade their IT to securely exchange data with fintechs. Customers’ ability to grant and manage fintech access to their bank accounts is out of reach if FIs don’t offer the API technology to support it. Without APIs for data sharing, fintechs must use screen scraping to collect consumers’ data—which means the consumer can’t limit the sensitive information a fintech has access to.

Private and public fintechs had no market capitalization data available for 2010, but in 2021, combined for $1.2 trillion. Neobanks also lacked available user stats for 2010, but held a collective 50 million accounts in 2021. Assets under management (AUM) of shadow banks, including hedge funds and private equity, skyrocketed over the period, from $3.1 trillion to $9.7 trillion.

The news: Maxwell Financial Labs and its subsidiary Maxwell Lender Solutions—a US-based fintech mortgage solutions platform founded in 2015—launched what it claims is a “first of its kind” product platform, Maxwell Processor Edge, targeting small to midsized lenders. What does it do? The web-based application is custom-designed for loan processors and integrates with lenders’ loan origination systems.

While financial service's digital ad spending has historically outpaced the digital ad market, we expect a slowdown in 2021 and beyond as incumbents in both banking and insurance focus their budgets on technological innovations to compete with emerging fintech companies.

Gen Z and millennials are also more likely to have more fintech accounts than their older counterparts and to use separate fintech tools differently. For example, Gen X and baby boomers turn to fintech applications for specific uses, while Gen Z and millennials use them to approximate and replace traditional relationships with financial institutions.

It helps counter the rise of fintechs, which threatens to erode banks’ customer relationships, as we discuss in our report, The Bank in 2025. Authentify lets incumbents give consumers control over their financial data. Providing consent capabilities through banks makes the process transparent, which helps build trust in the banking relationship.

The big takeaway: The FCA has long been a supporter of fintech-friendly oversight in the UK to level the playing field between incumbents and neobanks, and to help maintain the UK’s status as a global financial services headquarters. However, as British challenger banks have flourished, financial controls of some have not kept pace with their rapid growth.

Wide Net of CFPB Inquiry Will Open Door to Fintech Regulation. The CFPB’s inquiry into the BNPL lending practices of Affirm, Afterpay, Klarna, PayPal, and Zip covers the gamut.

While BNPL will likely remain a mainstay for its business, Klarna is exploring other growth avenues: It launched bank accounts in Germany last year and more recently introduced Kosma, an open banking sub-brand and solution for fintechs, financial institutions, and merchants.

If the fintech has a customer service issue, they get to talk to the bank directly rather than going through two different steps to reach somebody who can actually solve the issue. With third-generation banking as a service, the fintechs work with us to co-develop new products. That lets the fintechs thrive and scale and makes them more responsive to their end customer.

Context: In the competitive landscape surrounding financial services—crowded with fintechs, Big Tech, and nonbanking brands making innovative use of tech—JPMorgan’s adoption of agile processes and prioritization of tech updates is necessary for continued innovation and growth. Will it work? Like independent startups, many internal startups also fail at a rate of between 50% to up to 90%.

Wealthsimple, a fintech with over 2 million users, offers investing, savings, and money transfers, and raised CAD$750 million ($598.2 million) in May 2021. The funding seems to align with a shift in banking regulation in Canada.

The Washington-based fintech offers point-of-sale hardware and software for cannabis dispensaries. POSabit recently expanded into several states, including Georgia, Texas, and West Virginia. Why it matters: The cannabis market is huge—but federal regulation prevents mainstream FIs from offering payment services to customers and merchants.

Allegations of greenwashing threaten to derail the rapid growth of ESG investing strategies, but AI-powered fintech data solutions have the power to allay fears.

But crypto initiatives and investments could help it gain a stronger foothold in the metaverse to avoid being edged out by smaller payment fintechs that see an opportunity to serve the burgeoning space. More on this: Interested in learning more about payment implications in the metaverse? Check out our “Crypto payments and the metaverse” report.

STE keeps customers’ bank account numbers hidden from third parties like retailers or fintech apps. This helps better protect customers and FIs and mitigates fraud risk.

SMB credit card fintech gets $100M to expand into crowded corporate US market: UK-based issuer Capital on Tap is ramping up in the US after making its plunge in March—we unpack the troubles ahead for small firms like it competing with established players and not much differentiation.

Data from devices like leak detection sensors can improve insurers’ risk assessments, and their alerts can strengthen customer relationships.

The BaaS-growth play: SoFi will pair technologies from Galileo and Technisys for its enhanced BaaS arm, which it plans to offer to established banks and fintechs. Banking products it mentioned include savings, checking, credit cards, lending, and deposits. SoFi will also use the pairing for embedded finance, enabling non-financial companies to offer banking services to their customers.

The big takeaway: As competition in the card environment ramps up, Amex has aggressively invested in the future: It recently partnered with i2c to bring more fintech partners into its ambit and to embrace API-based issuance, and it’s exploring a presence in the metaverse, for example.