WEDNESDAY JUNE 23, 2021 VOL. 186 No. 119 AMERICANBANKER.COM Follow us on Twitter @AmerBanker A Las Vegas casino 5 bets against cash Resorts World is building its entire customer Ambitious plan experience around a digital app, hoping to eliminate the need for — and costs of — The Dave has grown steadily since its handling paper money. Page 6 inception and predicts that adding more banking and investment products will help it take off in coming years How fintechs are 6 helping salons straighten See story on page 3 out payments problems Beauty shops must handle transactions Gross profit Total revenue for multiple employees and contractors operating under one roof. Tech companies $600M are customizing software and transaction processing services for this niche. Page 7 $500M

$400M  starts 7 to offer transaction bank $300M services in U.K. $200M Goldman Sachs Group has begun offering cash management and treasury services in $100M the U.K. as it builds out its new transaction- $0 banking arm. Page 8 2018 2019 2020 2021* 2022* 2023* Morgan Stanley backs Source: SEC filing *estimated 8 blockchain with investment in Securitize The Series B round, also led by Blockchain Capital, marks the first investment in the dailybriefing Regional banks, credit unions blockchain industry by Morgan Stanley’s 3 begin lending to pot firms opportunistic investment arm. Page 9 Cannabis, though still illegal at the federal Basel’s crypto capital plan level, continues to inch into the financial Revolut said to eye 1 could boost banks’ interest mainstream. Small credit unions and lenders 9 fundraising at over in stablecoins as large as Valley National and East West $20 billion valuation The Basel Committee on Banking have moved beyond just taking deposits Revolut is in the early stages of a fundraising Supervision issued a proposal this from marijuana companies. Page 5 round that could value the British company month laying out how banks should treat at $20 billion or more. Page 9 held on their balance Banks’ robust capital mitigates sheets. It could give stablecoins, which are 4 risks, regulators tell Biden Banks can make indelible tied to traditional assets, an edge over more The huge buffers that banks built up over 10 impact on society without volatile digital assets like . Page 2 the pandemic are protecting the financial sacrificing profits system from looming threats, regulators It is possible for financial firms to value the How neobank Dave hit 10 told President Biden during a meeting that future of the planet and lift up marginalized 2 million users in four years also touched on climate change, extension communities while still generating strong The company, which started in personal of credit to the underserved and other returns for shareholders, Monica O’Reilly of financial management, has grown quickly topics. Page 6 Deloitte writes. Page 10 by helping consumers avoid overdraft fees and, more recently, adding a no-fee . It’s counting on a merger deal with a special-purpose acquisition company to fuel further growth. (See chart above.) Page 3 WEDNESDAY JUNE 23, 2021 AMERICANBANKER.COM PAGE 2

was “revolutionary,” said Georgia Quinn, of digital assets that are there, just like there DIGITAL CURRENCIES general counsel at Anchorage Digital is differentiation between capital treatment Bank, a financial institution that provides in connection with different types of debt -related services. instruments and different types of different Basel’s “Stablecoins are a different type of asset classifications of equity,” he said. and they don’t have the same volatility At a point in time where much of crypto capital concerns,” she said. “I’m really excited the public conflates stablecoins with that they’re finally getting some credit cryptocurrencies writ large, the Basel somewhere.” committee proposal could serve to highlight plan could While the Basel committee’s proposal the crucial differences between the asset asked for public comment on whether classes, added Mizrach. boost banks’ there should be potential capital add-ons “Basel is hopefully helping people wake to what it called “group one” cryptoassets up to the fact that the digital asset space (tokenized traditional assets and assets with is not just Bitcoin, or not just Bitcoin and interest in stabilization mechanisms, like stablecoins), ,” he said. “There’s a range of regulators appeared to acknowledge that things.” stablecoins those assets posed less of a risk to banks While banks are not currently clamoring than assets like Bitcoin. to hold cryptocurrencies on their balance By Hannah Lang That could pave the way for banks to warm sheets, there could be potential benefits to June 22, 2021 to holding stablecoins or other tokenized holding stablecoins in the future, Quinn WASHINGTON— Although banks are assets. said. only starting to grapple with the rising “The first step is to recognize that not all “It diversifies the asset class, and it allows popularity of cryptocurrencies, a framework digital assets will necessarily fit into one them to gain exposure to, potentially, from global banking regulators outlining basket, and the Basel committee certainly inflation,” she said. “U.S. federal banks possible capital charges for them is a likely recognizes that,” said Bruce Mizrach, a don’t necessarily have this problem because preview of how financial institutions could professor in the economics department at they’re generally backed by U.S. dollars, but soon come to view digital money. Rutgers University. “There’s the possibility for central banks in other jurisdictions where The Basel Committee on Banking that some of the truly stable among the that currency may not be as stable, this Supervision issued a proposal this month stablecoins will, in fact, be treated similar to might be a nice addition to their portfolio.” laying out how regulators should make cash-like assets.” However, the capital charge the proposal banks treat Bitcoin and other digital assets. Gannon agreed that it was important for suggests imposing on assets that are not tied Under that proposal, bank exposures to regulators to recognize that the “thousands to a fixed value, like Bitcoin, would likely cryptocurrencies that are not linked to of cryptocurrencies out there” are structured have the effect of discouraging banks from any underlying asset would be subject to differently and thus pose distinctive risks to holding those assets on their balance sheets, a 1,250% risk weight, meaning that a bank bank balance sheets. said Mizrach. would likely need to hold a dollar in capital “My guess is that down the road, in “It seems to be very unlikely under for every dollar’s worth of a digital asset. terms of capital treatment, there’ll be some these rules as proposed, given the group While the proposal is likely years away discrimination based on the different kinds two assets, that there will be prop desks at from adoption and could morph over time as the digital asset space continues to evolve, as even the committee acknowledged, many Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 industry experts were encouraged by the Phone 212-803-8200 AmericanBanker.com framework. “It’s a strong indicator that the regulators Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 are fully conscious and sensitized to the Managing Editor Dean Anason 770.621.9935 developments that are going on in this Reporters/Producers space,” said Stephen Gannon, an attorney at Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 Murphy & McGonigle. Washington Bureau Chief Joe Adler 571.403.3832 The panel of global regulators also Executive Editor, Technology Miriam Cross 571.403.3834 suggested that other digital assets like Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 stablecoins, which are tied to real-world BankThink Editor Rachel Witkowski 571.403.3857 assets and currencies, be subject to less John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 stringent capital rules that would more Hannah Lang 571.403.3855 closely resemble capital regulations for Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 traditional bank assets. Digital Managing Editor In particular, that differentiation between Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 digital asset classes by banking regulators

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JPMorgan trading Bitcoin and Ethereum in said. “But if we looked at the neobanks, large quantities,” he said. “The capital cost is CHALLENGER BANK their approach to overdraft was to not allow just too high.” overdraft at all. So if you’re stuck at the gas Quinn noted that banks have generally station or grocery store with insufficient not been interested in holding assets like How neobank funds, you either can’t get home or can’t feed those anyway, given how volatile they have your family. We saw that people would rather proven to be. Dave hit 10 pay the fee if it meant actually being able to “I don’t think there are any banks out pay for everyday essentials in these sort of there that are wanting to hold crypto on their emergency scenarios. And so we created balance sheets,” she said. “No bank is saying, million users what we thought the most fair product was, ‘Oh I want to hold crypto on my own balance one that I would have loved as a college kid.” sheet. I’m going to hold crypto as my capital in four years Dave provides just-in-time cash advances reserves to back the deposits of clients.’” of up to $100, even to customers who don’t Instead, many banks are looking to offer By Penny Crosman have their paychecks directly deposited in a custodial services for their customers’ June 21, 2021 Dave account. It allows early direct deposit, digital assets, which wouldn’t come with a When people speak of challenger banks, meaning that people who normally get hefty capital charge. they tend to talk about Chime, Varo and paid on Friday can access their paychecks “JPMorgan, Bank of New York Mellon Current. But the neobank Dave, which on Wednesday. And it analyzes customers’ and so on want the custodial asset business, launched in 2017, has quietly become a force upcoming bills and warns them when they’re because custodial questions have been to be reckoned with. going to overdraft. extremely important,” said Mizrach. Dave has grown to 10 million users of its In focusing resources and attention So why suggest a capital charge on those financial management and other services, on the problem many people face with types of digital assets in the first place if counts “Shark Tank” star and Dallas overdraft fees, Dave tapped into the zeitgeist banks aren’t interested in holding them? It Mavericks owner Mark Cuban among its in a way that banks are starting to. Capital may have to do more with sending a message investors and recently agreed to merge with One Financial recently began supporting to the public, said Quinn. a special-purpose acquisition company, VPC early direct deposit. Ally Financial has “I think people maybe want to get ahead Impact Acquisition Holdings. The deal with eliminated all overdraft fees. In April, PNC of something just to make it clear that VPC — which values Dave at $4 billion — will Financial Services Group launched a Low nobody in their right mind is going to do ultimately result in Dave becoming a publicly Cash Mode service that signals account this, but just also so the public understands traded company this fall. holders when their balances are about to that, ‘Don’t worry guys, the banking system Along the way, Dave’s profits have steadily go negative and gives them 24 hours to is sound, please continue to deposit your increased. In 2020, it had $122 million in block transactions or add funds before fees assets in these banks,’” she said. total revenue and $75 million in gross profits, are assessed. Huntington Bancshares uses Gannon agreed that underscoring the according to a securities filing by VPC. Dave artificial intelligence to analyze customers’ proposal is a continued focus by global has 160 employees, and that number is upcoming bills and offer a heads-up that regulators on the safety and soundness of expected to expand. they are on the brink of overdrawing. Wells the banking system. Much of Los Angeles-based Dave’s rise Fargo offers Overdraft Rewind, a service in “I think [the regulators] believe that can be chalked up to its mission against which the bank reviews the 24 hours before innovation is obviously necessary, and overdraft fees, a strategy many challenger the paycheck funds were made available and they’re not trying to stand in the way, banks and even a small number of traditional reverses some overdraft fees. but at the same time, they have got to be banks have taken up. Dave has also benefited But much of the industry still leans on concerned about the safety and soundness from the support of high-profile investors the revenue obtained from overdraft fees to of the banking system,” he said. “They want like Cuban — who Dave founder and CEO achieve profitability. to make sure that they’re taking actions that Jason Wilk says taught him the value of “What Dave’s success shows us is that in their minds, at least, are consistent with making a company profitable quickly — and there is demand for better features within ensuring that banks aren’t overly exposed to The Kraft Group. And looking forward, the financial relationships and that there is room assets that are risky.” company plans to broaden out its banking for many models to emerge, from Chime and investment product portfolio, to deepen to First Boulevard, with different models relationships with its young audience. and different communities in focus,” said Dave was founded on the idea of Brad Leimer, co-founder of Unconventional reinventing overdraft, according to Wilk. Ventures in San Francisco. “While banks have Its original tagline was, “Dave: outsmart finally woken up to fintech startups eroding overdrafts.” portions of their revenue streams, it seems “When we first got the company together, that they have only doubled down on what we looked around the industry and saw that makes them profitable and efficient, not on ... banks were charging $34 per overdraft, what consumers are really looking for — and up to a hundred dollars a day in fees,” Wilk that’s change that helps them have better

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 23, 2021 AMERICANBANKER.COM PAGE 4 financial outcomes.” processing. If customers want the money sent the fold as their financial lives become more Aaron Klein, a senior fellow at the via ACH, it charges nothing. complicated. Brookings Institution and outspoken critic of Dave also, like other challenger banks, “We recognize that the last few years of banks’ overdraft policies, agrees. receives interchange fees when customers Dave have really been about solving people’s “Consumers want faster access to their use their debit cards. It also gets a small short-term pain of dealing with overdrafts,” own money than the current banking system affiliate fee from some job providers when Wilk said. “And now we are much more provides,” Klein said. “Banks that adapt, users use its part-time job finder, Side Hustle, focused on becoming the daily financial hub providing their customers faster access to to find and accept gigs. for our customers, with everything related to their own money, are doing the right thing. It Though Dave offers early direct deposit, their financial life.” is a shame that the Federal Reserve and other Wilk doesn’t see tremendous value in it. That’s part of the reason to go public, bank regulators continue to operate and “Customers do like it, but too often, it he said, and to build out Dave’s banking support a system that penalizes those living doesn’t do a whole lot to help the customer,” portfolio. paycheck to paycheck to maximize bank he said. “I don’t quite understand how that “Anything related is on the table at this profits.” would really help people except for the one point for what we could offer,” Wilk said. “We time that resets your schedule the first time. think if we can make Dave that trusted brand Approach to overdraft That essentially becomes just your new name for financially inclusive products for Dave’s $100 advance, which is called paycheck date.” our customers now, they can count on us to ExtraCash, is a form of nonrecourse overdraft The combination of ExtraCash, early direct offer something at an incredibly reasonable product. The company doesn’t require access deposit and the ability to tell people how price compared to what they’re used to to a paycheck-depositing account, so it’s not much they can spend between paychecks set paying, then that’s something that we want to a form of early wage access. Dave doesn’t Dave apart from the beginning, according to get into.” conduct a credit check and doesn’t require Wilk. the customer to pay the money back, so it’s Side Hustle is also a differentiator. How Mark Cuban got involved not a loan. There are no late fees and no “We saw that quite a few customers were Wilk met Mark Cuban when he was writing interest charges. driving for Uber or Lyft,” Wilk said. “And so we a blog about tech companies. He had recently Customers can give a tip if they want to; thought it’d be really cool to offer our own job sold a small business and graduated college the average tip is $1. The tip-based model marketplace for side jobs.” and was figuring out his next move. was rolled out in 2017 and was a page out of Dave has 35 part-time employer partners, He attended a tech conference in 2008 GoFundMe’s book, Wilk said, “letting people including Instacart, DoorDash and where Cuban was the keynote speaker. decide what they think is fair for the product. Postmates, that provide opportunities for “He had only made a few angel And that can either be zero or any amount of people to make money on the side. investments, but I thought he was just such money the customer wants. And that was a “That’s another way to avoid a negative a smart guy,” Wilk said. “I was blown away by really interesting experiment for us to figure balance and not pay overdraft fees,” Wilk said. what this guy had done in such a short time out what people were willing to pay.” Dave’s management saw that the most span in his career.” Some fintechs have gotten into trouble for requested feature from customers was a Dave Cuban gave a speech about the 10 ways making voluntary tips a factor in the decisions bank account. So in December, the company entrepreneurs could get him to invest in their around who gets advances and who does not. — which had previously helped customers company. He gave his email address and At Dave, this doesn’t happen, Wilk said. manage manage finances in outside accounts encouraged people to send him pitches. At Dave, the tip is never factored into the — launched its own bank account with no Wilk wrote an article about Cuban’s decision to grant the advance and more than overdraft fee and no minimum balance. More talk and sent it to him. At a reception, he 90% of people that ask for it get it, Wilk said. than 1.3 million existing customers have approached Cuban and told him he admired Dave doesn’t always get paid back for the signed up. him and hoped he would invest in a future cash advances. company of Wilk’s whenever he came up with “That’s been one of the unique challenges Customer profile an idea. Wilk emailed Cuban several business to not requiring a direct deposit to access,” One unique characteristic of Dave is ideas over the next few years. Wilk said. “We very much view that product that 80% of its customers are under the age Wilk finally settled on an idea about a as a way to help people get back on their feet of 30. The average age among traditional platform for sports fans. He applied to the and as a way to build a long-term relationship bank customers is about 53. Most of Dave’s startup accelerator Y Combinator and got in. with the customer. And so we decided to customers have come through word of Cuban happened to lead a funding round for make money on it with completely optional mouth, Wilk said. the cohort Wilk’s company was in. fees.” “And then we have this very easy to “He’s just been an incredible mentor,” Wilk Dave charges $1 a month for access to understand brand name of Dave, which is said. “And we’ve now been working together its financial insights, which “a significant supposed to represent the everyday customer, for almost almost 12 years, through a couple amount of customers” use to understand but also David versus Goliath, given how of different companies.” The Kraft Group has upcoming bills, Wilk said. we’re going up against” large banks that also been a longtime investor. If customers want ExtraCash funds charge heavy fees, he said. At that first company, Cuban told Wilk to instantly, Dave charges a fee for expedited Dave has a plan to keep young people in cap his salary at $30,000 a year until he could

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 23, 2021 AMERICANBANKER.COM PAGE 5 get the company profitable. 50 banks and credit unions. not immediately respond to a request for “I was living in Los Angeles, trying to run Loans represent a big step beyond the comment. a company,” Wilk recalled. “You can imagine initial deposit services that banks and credit A spokesperson for the California the financial stress we had, and that also led unions began offering to the cash-heavy Department of Financial Protection and to a lot of overdrafts in that time period. So pot industry several years ago. For cannabis Innovation, which also regulates East West, in a strange way, that was the seeding of the businesses that have expensive non-bank pointed to guidance that the agency released idea for Dave.” debt, banks can offer a potential avenue for in 2019 to help give clarity to banks and credit Wilk and his partners made the company refinancing into more favorable terms, even unions that were looking to offer services to profitable. It was sold in 2015. Both joined as they continue to pay higher rates than the industry. the seed round of Dave. Cuban invested $3 other companies. The involvement from Valley National million in Dave at the start, according to an One of the regional banks that is and East West is significant in that cannabis article in Fast Company. establishing a presence in cannabis lending banking has historically been the realm is the $41 billion-asset Valley National of smaller banks and credit unions. The Bancorp in New Jersey, which has made a regional banks’ entry is welcome news for CANNABIS small number of real estate-backed loans. bigger operators that might need larger loans, The entry into lending follows an initiative to consultants say. accept deposits from marijuana businesses, Other smaller lenders that have offered Regional an effort that now includes several dozen credit to marijuana-related businesses clients, said Rick Kraemer, the bank’s chief include Illinois-based Credit Union 1, Seattle- banks, credit financial services officer. based Salal Credit Union and Massachusetts- “I think we are starting to gain better based GFA Federal Credit Union, according comfort,” Kraemer said, “and from what I to executives at those institutions. unions begin understand, the rest of the industry is as well.” To be sure, the vast majority of banks and Pasadena, California-based East West credit unions are continuing to steer clear of lending to pot Bancorp has also offered credit. The bank any businesses linked to marijuana, wary of has previously posted a job opening for any potential legal ramifications since the a portfolio manager who would evaluate drug remains illegal at the federal level. firms credit applications from “existing and new” Only 684 out of the thousands of U.S. banks cannabis-related businesses. and credit unions were offering services By Polo Rocha East West got a mention in a publication to marijuana-related businesses as of last June 21, 2021 by the consulting firm MGO, which lauded December, according to the Financial Crimes Loans to marijuana companies, long the $57 billion-asset bank for “demonstrating Enforcement Network, which receives taboo even at banks and credit unions that the benefits of providing an even playing field suspicious activity reports from banks that take deposits from cannabis firms, are finally for cannabis entrepreneurs” by offering loans serve the industry. That number was up gaining a degree of mainstream acceptance. and other banking services. substantially from 2018 but down slightly A handful of insured depository Janie Beaman, an East West spokesperson, from just prior to the pandemic. institutions, including two banks with more said that the bank is conducting a small pilot Some banks that offer deposit services than $40 billion in assets, have started program that is invitation-only and is not either have not made the jump into loans or offering credit in states where the drug is accepting applications for new accounts. are not offering credit beyond a few cannabis- legal, according to interviews with lenders She declined to provide more details on the related customers. The result is that almost and industry consultants as well as publicly bank’s marijuana banking program. all of such businesses that need to borrow are available information. On a recent podcast, East West national forced to turn to more expensive non-bank The newfound openness to lending comes relationship manager Peter Su, who joined lenders. as the U.S. cannabis industry continues to the bank this year to focus on cannabis “Most of our clients in the regulated mature and builds a heftier financial track clients, said he was told that regulators industry are working with banks for checking record. Some banks and credit unions have encouraged East West to begin offering and savings, but the idea of getting a loan been accepting deposits from pot companies services to marijuana companies. from the bank is just completely foreign to in recent years, in accordance with stringent “Mind you, this is before my time here, but them,” said Aaron Lachant, a partner at the federal guidelines, which has given them I’m told that that was kind of the evolution Los Angeles law firm Nelson Hardiman who an unusually deep understanding of those where the regulators came to them and said, is also board chair of the cannabis consulting businesses’ cash flows. ‘Look we want to see bigger banks ... get into firm MMLG. “Banks are realizing their visibility into this space. Are you willing?’ So they dipped Federal lawmakers have sought to give the these businesses is better than any other their toes in,” Su said during a podcast hosted banking industry more legal clarity through commercial loan that they have, because they by a cannabis-focused venture capital firm. the SAFE Banking Act, which cleared the U.S. see the activity day in and day out,” said Kevin A Federal Reserve Board spokesperson House of Representatives earlier this year. But Hart, founder and CEO of the compliance declined to comment Monday, and a the bill has been stuck in the Senate, where firm Green Check Verified, which works with representative of the San Francisco Fed did some Democrats have sought to fold it into a

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 23, 2021 AMERICANBANKER.COM PAGE 6 broader package that legalizes the drug and payroll,” Seefried said. “They can pay off their public companies to disclose to investors expunges marijuana arrest records. line of credit pretty quickly once the money how climate change affects their bottom For now, many loans involving marijuana comes in.” lines and bank watchdogs have put climate- companies are tied to real estate — lending related risks to the financial system atop their to a strip mall operator that has a dispensary UPDATE agendas. as a tenant, for example. That is largely a This story was updated to note that The event marked Biden’s first face-to-face function of how easily collateral like land or a a Federal Reserve Board spokesperson meeting with Fed Chair Jerome Powell. Also storefront can be repurposed if the situation declined to comment on recent comments attending were Gary Gensler, head of the goes south. by a banker at East West, and again to SEC; Rostin Behnam, acting chairman of the “You can turn a dispensary into any other add a comment from a spokesperson for Commodity Futures Trading Commission; retail operation, but if you’re talking about the California Department of Financial Dave Uejio, acting director of the Consumer things in a [cultivation] facility like lights Protection and Innovation. Financial Protection Bureau; Jelena and processing equipment, that’s pretty McWilliams, chairman of the Federal Deposit specific to their industry,” said Troy Peters, Insurance Corp.; and Michael Hsu, acting president and CEO of Jonestown Bank & RISK MANAGEMENT Comptroller of the Currency. Trust, a community bank in south central Pennsylvania that has done some real estate loans. Pennsylvania has legalized marijuana Banks’ DIGITAL PAYMENTS for medical purposes, but not for recreational use. robust capital Valley National, the New Jersey-based A Las Vegas regional bank, is similarly hesitant to broaden into non-real estate-backed loans before the mitigates risks, casino bets industry gets more legal clarity on how to serve marijuana customers. regulators tell But non-real estate loans are taking place at against cash some institutions. Seattle-based Salal Credit Union, for example, offers secured capital Biden By Kate Fitzgerald equipment loans in addition to commercial June 21, 2021 real estate loans. By Bloomberg News Cash is so pivotal to the casino experience In one notable deal, an unnamed bank is June 22, 2021 that Las Vegas ATMs get away with charging offering a $12 million revolving credit facility Wall Street regulators delivered a uniform an average of $10 per withdrawal. But a new to the Oakland, California-based cannabis message to President Joe Biden Monday: The resort is taking a digital approach, hoping to retail chain Harborside. Tom DiGiovanni, huge capital buffers that banks built up over streamline processes and reduce many of the Harborside’s chief financial officer, said the pandemic are protecting the financial costs associated with handling cash. the loan is another sign that the industry system from looming threats. Along with reducing the risk of theft, has become less “radioactive” to financial In a meeting at the White House, the minimizing cash-handling at casinos and institutions. heads of the Federal Reserve, Securities and associated retail shops cuts down on labor Partner Colorado Credit Union, one of the Exchange Commission and other agencies costs and eliminates lines for gamblers earliest financial institutions to offer services told Biden that the financial system is doing waiting to cash in and out. to the cannabis industry, is also looking to well, according to a statement released by the The $4.3 billion Resorts World, opening expand beyond its current pipeline of real administration. Among topics discussed were June 24, claims to be the world’s first fully estate loans, with plans eventually to roll out how to continue the economic recovery and contactless casino, with mobile payments equipment and construction loans. It will do extend credit to underserved communities. technology built into every channel — hotel so through Safe Harbor Financial, a cannabis “The regulators reported that the financial rooms, restaurants, shops and across the banking entity that it owns. system is in strong condition,” the White gaming floor. Sundie Seefried, who is stepping aside as House said. “They further indicated that Resorts World is encouraging the cashless Partner Colorado’s CEO next month to lead financial risks are being mitigated by robust experience by promoting a proprietary the Safe Harbor division, said that the new capital and liquidity levels in the banking rewards program for its mobile app powered banking entity is planning to launch a line system, and healthy household balance by Las Vegas-based Sightline Payments of credit for long-standing cannabis clients sheets stemming from fiscal support and the (much like the cashierless Amazon Go stores, in July. That product will help give clients ongoing economic recovery.” cash will still be an option for those who flexibility to deal with any delays in payment Among the topics discussed was the Biden prefer it). processing and courier services, she said. administration’s push to combat global Sightline’s Play+ process for loading “We know the money is in transit, they warming and how financial regulators and funds to the Resorts World mobile app will know the money is in transit, but the money banks can contribute to that effort. The play a key part in reducing the pain points didn’t get there in time for them to make SEC is working on a rule that would require associated with handling cash, according to

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Joe Pappano, Sightline’s CEO. gambling to drive future business as more “We want to become one of the top funding U.S. states approve internet betting. PAYMENT PROCESSING mechanisms for casino and online gambling, Resorts World’s mobile app — which making it easier and more secure to manage also provides keyless entry to guests’ gambling funds as internet gambling hotel rooms — prompts users to enroll in How fintechs becomes legal in more jurisdictions,” he said. Sightline’s Play+ electronic payments flow. Founded in 2010, Sightline has 1.5 million Users link a payment card or bank account are helping customers enrolled in Play+ via 70 programs to immediately receive a digital version of a in 39 states. reloadable prepaid Mastercard . The pandemic spotlighted issues around Rewards and winnings accumulate in the salons handling cash, spurring Nevada gaming app, for users to spend directly, transfer to a regulators to begin working on an agreement bank account or cash out at the casino or via straighten to expand cashless betting, a move that is an ATM. Enrollees will also receive a physical encouraging competition. Two other Las version of the card by mail, Pappano said. Vegas-based companies, Everi Holdings and To gamble, players must set up a digital out payments Scientific Games Corp., are developing rival wallet within the Resorts World mobile app digital wallets for gambling. that links to Play+. Users may add funds to problems Caesars Palace last month said it’s testing the gaming wallet via Play+ or load cash at Everi’s Jackpot Xpress secure digital payment the casino’s player services desk or through By John Adams system that supports secure identification, kiosks located around the casino that are June 21, 2021 loyalty and a new method for managing taxes provided by NRT Technology. Hollywood’s Hairroin Salon has almost as on casino winnings. Supporting systems include an instant- many ways to pay — and people who need Digital gambling methods in Nevada ticket system that lets gamblers collect table to be paid — as actual hair styles on offer. could take a bite out of revenue for local and winnings via a voucher and move to another And that doesn’t fully consider the wave of national independent ATM operators, who game and RFID-embedded poker chips to independent contractors the salon started charge among the highest fees in the nation, ensure accuracy, Resorts World said in the using over the past year. Pappano said. Rising operational costs also release. “We have a tattoo artist, who is a rental, make it increasingly expensive for casinos to Pappano, who spent 30 years at Vantiv who wants to use our main payment system,” securely manage their cash hoards. (now Worldpay) overseeing merchant sales said Janine Jarman, who has operated the While some casinos already offer various and electronic payments for the gaming salon in Hollywood for the past 16 years. forms of cashless gambling and many hotels industry before joining Sightline late last year, “There aren’t a lot of easy ways to do that.” and restaurants have contactless payments, said the pandemic accelerated a longtime Like a lot of salons, Hairroin has complex Resorts World marks the first time hospitality, push toward cashless gambling. staffing and workflow requirements, retail and gambling are connected for a Sightline, which has worked with existing creating challenges in processing consumer completely cashless experience within a Las Vegas casino operators including MGM transactions and payroll. As a result, it’s major casino, Pappano said. Grand to support online sports betting and using a payment system that’s specifically “The technology to connect online issues prepaid cards for cashless gambling designed for the salon industry. gambling and hospitality has been evolving through the Bank of George and Sutton The technology provider, Los Angeles- at different rates, but Resorts World is the first Bank, says many consumers now prefer the based Boulevard, sells integrated software to be built from the ground up to support a convenience of digital channels for tracking for booking, point of sale software, fully digital experience,” he said. bets. scheduling, business management and Resorts World, owned by Malaysia-based “From both the technology and the incentive marketing for clients and staff Genting Group, will operate in partnership regulatory perspective, the pandemic was a and recently launched Boulevard Payments. with Hilton Hotels, along with several major catalyst in breaking down the barriers It’s like a stylists’ equivalent of Stripe or technology providers working alongside to fully contactless gambling and now we’re Square, with programs that accommodate Sightline to create a cashless ecosystem with finally starting to see it become a reality,” the distinct processes for beauty salons, different layers. Pappano said. barber shops or related businesses — such Sightline this month also completed as combining gig worker and full-time staff the purchase of cross-town casino app payments or melding booking schedules for developer Joingo for an undisclosed sum. The stylists with different areas of expertise. acquisition followed a $100 million infusion “Historically, the salon space has been of venture capital funding in April from dominated by cash-handling businesses,” investors including Cannae Holdings and said Matt Danna, co-founder and CEO of its chairman William P. Foley II, who is also Boulevard, adding that’s led to disconnected chairman of the board of Paysafe. programs for merchant processing and a U.K.-based Paysafe has said it expects fragmented workflow. its payments processing volume for online Boulevard just launched a software-as-a-

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 23, 2021 AMERICANBANKER.COM PAGE 8 service integration of several of its features, consumers in multiple channels while booking history, product sales and payment acting as a payment facilitator specializing providing customized experiences, there processing. in salons, barber shops and related will be more opportunities for payment Heyday is additionally planning businesses. Payment facilitators, which facilitators that cater to specific services. to franchise its business to expand include companies like Stripe and Square, “There are a variety of industry-specific geographically. Franchising creates an aggregate services on behalf of merchants, payment technologies that service unique additional set of challenges as brands allowing them to bypass a direct contract needs of the individual industries,” said Rick manage payment processing in different with an acquiring bank. Payment facilitators Oglesby, president of AZ Payments Group, locations with a different ownership have gained ground over the past couple of adding lawyers, for example, do a lot of structure across a franchise network. years as a way to quickly onboard merchants work on retainer, so they pre-bill retainer “Different payment types have different and migrate to digital business management amounts and those amounts need to be held taxes,” Pollack said. “A facial is a service, and payment processing, as cash and card- in separate escrow accounts. which gets one type of tax. And purchasing a present payments give way to contactless “Many of these solutions are too niche- skin care product in the store or online has a transactions and e-commerce. oriented, the opportunities too small, for sales tax. That has to be managed.” Boulevard’s payment facilitator platform the major processors to pursue directly, so And clients also pay differently, with charges different monthly fees based on the there’s an ecosystem of industry specialists some using vouchers, some paying on a range of services it provides. that create the value-added solutions to fit subscription and some upon the time of “It’s always been awkward in salons or the needs of the niches,” Oglesby said. service. “There’s gratuities and commissions spas, where there’s an ATM in the back or Hairroin, for example, has to book for staff, and that has to be done smoothly if the customer puts cash in an envelope appointments for stylists, hair colorists, nail at the point of sale in a service-oriented and leaves it on the front desk,” Danna said. technicians and the tattoo artist. Some of the environment, whether it’s a mom-and- “What we’re looking to do is to make all of professionals work on commission, some on pop location or a multi-location footprint,” that digital, along with the booking and contract and some on salary. All of these Pollack said. management, in one experience.” services are booked and billed differently, There are about 900,000 salons and more with different costs or rates. But there’s also than 135,000 barber shops in the U.S., a need to avoid treating each person at the PAYMENTS according to IBIS. Unlike most merchants, salon as a different business. which process single payments for a single “We started with an actual paper desktop service, salons often charge one fee to calendar to book appointments, and we Goldman consumers that covers an itemized range moved into computers that stylists could of services that are billed, scheduled and use to edit their days and their schedules,” Sachs starts catalogued separately. The closest corollary Jarman said. “But that got difficult because from a transaction processing perspective of the different services that we have and would be the health care industry, which how they overlap.” to offer includes different providers who engage By connecting to the Boulevard’s program, with the same patient, with the cost handled Jarman hopes to connect the salon’s staff and transaction differently in each case by the patient and consumers to the same management system insurance provider. and user interface, centralizing payroll Boulevard is trying to thread a needle and transaction processing. There are also bank services between software platforms that serve the specific problems she hopes to avoid, such salon industry and payment companies that as clients bailing on appointments at the in U.K. offer booking apps for salons. Stripe, for last minute, leaving time slots open and example, has a network of software partners unfillable. By Bloomberg News that support booking for myriad businesses, “The digital system allows the payment to June 21, 2021 such as camps, salons, “wellness” companies be collected upfront, so the time is paid for Goldman Sachs Group has begun offering and gyms. if the client doesn’t show up,” Jarman said. cash management and treasury services in Square offers a salon-focused“It’s not always possible to fill an open slot the U.K. as it builds out its new transaction- appointment booking portal that it pairs that quickly, so the stylist can’t get paid.” banking arm. with its payment processing software and Even within a single niche like hair salons, The bank plans to eventually offer point of sale and contactless payment there are different models that the payment payments in more than 125 currencies, technology. facilitator model can accommodate, said deposit accounts, escrow services, liquidity Within the beauty industry, there are a Michael Pollak, CEO of Heyday Skincare, solutions and payroll, it said in a statement handful of business management software which has 10 locations in New York, Monday. companies that compete with Boulevard, Philadelphia and Los Angeles. Since launching its transaction banking including Booker, Rosy and Insight. Heyday has spa services and in-store and business in the U.S. last June, Goldman has As merchant models become more online sales for a line of skin care products. attracted more than 250 clients, taking on complex due to the stress of serving It uses the Boulevard system to track over $35 billion in deposits and processing

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 23, 2021 AMERICANBANKER.COM PAGE 9 trillions of dollars through its systems, The move is a sign of Wall Street’s Revolut Chief Executive Nikolay Storonsky according to the statement. further embrace of emerging blockchain said in an interview with Bloomberg this The investment bank’s expansion into technologies, including the use of digital month that the company is looking at further moving money for large companies is part of tokens to represent shares of companies or fundraising but declined to discuss further. an attempt to generate more stable revenue assets such as real estate. Securitize plans to Sky News reported in April that Revolut was streams to complement its volatile — and soon launch a platform allowing investors seeking a valuation of more than $10 billion. expensive — to buy and sell shares of closely held assets, The new money would increase - trading and investment banking units. It similar to the way the Robinhood app based Revolut’s valuation several times agreed to a partnership with Visa this month functions for publicly traded companies. over a fundraising round in 2020, when the to enable corporate clients to send and track “We make long-term investments in digital banking services company raised $500 high-value payments to other businesses businesses and asset classes that are ahead million, giving it a value of $5.5 billion. The overseas. of the curve,” Teixeira said in the statement. new valuation would make Revolut the U.K.’s The news was reported earlier by the “Our investment in Securitize is a sign that most valuable startup, surpassing Checkout. . we believe in the growth and adoption of com’s $15 billion mark. digital-asset securities.” Revolut, which provides digital banking More than 150 companies already use services via an app, is part of a wave of fintech VENTURE FUNDING a Securitize service to find backers, and startups attracting multi-billion-dollar over 300,000 investors have registered to valuations from investors. use Securitize technology to buy shares, Swedish startup Klarna Bank AB, which Morgan spokesman Evan Wagner said. The company, lets online customers pay for their shopping founded in 2017, is awaiting regulatory in installments, raised cash at a $45.6 billion Stanley backs approval for both its trading platform and valuation this month after a series of funding its app, with sign-off expected in coming rounds that more-than quadrupled its months, Domingo said. valuation in less than a year. In April, San blockchain Francisco-based Plaid raised new financing at a $13 billion valuation, just a few months with VENTURE FUNDING after a $5.3 billion deal with Visa fell through. Revolut, founded in 2015, has about 15 million personal and 500,000 business investment in Revolut customers for its products, which include bank accounts, international money Securitize said to eye transfers, crypto-currency and stock trading as well as bill paying and budgeting tools. By Bloomberg News Adjusted revenue in 2020 rose 57% to 261 June 21, 2021 fundraising million pounds ($362 million) but operating The startup Securitize, which is losses doubled to 201 million pounds as its developing a blockchain platform for at over rapid expansion saw staff costs surge. investors to buy and sell shares in closely held companies and other assets, gathered $48 million in a fundraising round co-led by $20 billion Morgan Stanley. The Series B round, also led by Blockchain valuation Capital, marks the first investment in the blockchain industry by Morgan Stanley By Bloomberg News Tactical Value Investing, the companies June 21, 2021 said in a statement Monday. Pedro Teixeira, Revolut is in the early stages of a fundraising co-head of the opportunistic investment round that could value the British company arm of the New York-based bank, will join at $20 billion or more, people familiar with Securitize’s board. Morgan Stanley and the matter said, as investor cash pours into Blockchain Capital are the two biggest fintechs. Series B investors, with neither company The company has held preliminary talks disclosing the size of their stakes. with investors about raising funds, though Morgan Stanley sees “this as the future no final decisions about timing or amount of finance — a future platform for finance,” have been made, the people said, asking not Securitize Chief Executive Carlos Domingo to be identified because the deliberations are said in an interview. “The market potential private. A representative for Revolut declined is huge.” to comment.

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confidence to drive economic growth and and attracting high-value customers will, in BANKTHINK spread prosperity.” fact, put firms in a better position to invest Financial institutions that not only in financial inclusion initiatives directed embrace this amplified role but also lead the toward the underserved. Banks can way will be the ones who make a new future Finally, we expect financial organizations possible. They will have a commitment to to form alliances that enable them to extend make indelible making an indelible social impact alongside the scope and value of their offerings robust profits. Let me suggest a few things and innovate for the next generation of that organizations leading the way will do consumers. impact on differently and better. New business models that respond to Financial firms that seek to lead in the urgent social challenges will more than society future will pair the power of advanced compensate for declines from traditional technologies with human ingenuity. Artificial revenue sources, but they will require drastic intelligence, for example, has the potential to shifts away from current ways of making without replace routine human tasks but also provide money. insights for bankers, insurance underwriters, The recent launch of Google’s Plex bank sacrificing or property managers to solve complex account, in partnership with several banks, problems. In fact, “superjobs” — roles that is an example of this kind of emerging require a breadth of technical and soft skills cross-industry alliance. This product lets profits and aggregate roles previously performed by users open bank accounts, pay friends, and multiple people — will emerge in many areas manage budgets through a new version of By Monica O’Reilly of the financial services industry. the Google Pay app. It is a model that appears June 21, 2021 Helping workers adapt will be critical. In to benefit all involved. Listen to an earnings call from a financial a recent Deloitte survey, 72% of financial These examples underscore our belief that services company today and you will hear the services executives identified “the ability of it is possible for financial firms to positively CEO describe the impact of the COVID-19 their people to adapt, re-skill, and assume affect society without negatively affecting pandemic and the way it has affected new roles” as a high-priority item to navigate profits. This belief guides our vision for everything from revenue and customer future disruptions. Similarly, the number of the future and inspires us to redefine the service to managing how and where work leaders highlighting the need to transform bottom line. A higher bottom line values gets done. But you might also hear something worker roles has doubled since the onset of the future of our planet and people just as else on that call — an acknowledgment of the the pandemic. It’s on the minds of rank-and- much as profits. It blurs the line between need to create a more inclusive, sustainable, file workers, too. A plurality or participants the striving and the successful until there’s and just world and the firm’s commitment to in a recent Deloitte webcast said “new tools less inequality and more shared wealth. That doing its part to make it happen. to augment and automate human activities” boost to the economy is also a virtuous cycle That is a profound shift, and it reflects an are having the greatest impact on their that enhances the profit potential for banks important new reality. Financial services organizations. yet again. companies have a unique opportunity to Financial services leaders can play an Financial firms can create real and lasting address major societal issues, while also important role in supporting society through change for the better on a global scale. They nurturing new markets and generating profit. work, workforce, and workplace transitions are in a position to influence almost every Companies can — and should — aspire to and can serve as a model for efforts to corner of the economy and play a vital role this, as it is an opportunity to not only benefit reach excluded segments of the workforce. in transforming it. Their ability to seize the shareholders but also to collaborate with One example is a community-hiring model emerging opportunities our changing world other key stakeholders. developed by a major bank that seeks to presents can have an enormous impact We call it a “higher bottom line” of human- reduce barriers to employment for qualified both on the industry and our collective centered capitalism. individuals with criminal records. The bank human experience in the years ahead. If they Financial institutions are in the best recently announced plans to expand the embody the principles of a higher bottom position to help move society in a different program, which provided jobs for more than line — placing people on par with profits, and direction because they sit at the center 2,000 people and represented 10% of its new actions over intent — financial services will of the economy. Following this path will U.S. hires last year. lead the way to a more inclusive, educated truly set them apart because stakeholders In the years ahead, financial firms will society and a sustainable, profitable future. increasingly will expect financial institutions also become even more customer-centric. to do the right thing — and profit while doing Delivering on the expectations of high-value Monica O’Reilly is a vice chair at Deloitte. it. customers — those that demand more direct, She leads the organization’s U.S. financial Many firms have already started. More personalized, and socially responsible services industry group. q than 40% of participants in a March Deloitte- offerings — will be even more important hosted webcast said their organizations for not just profitability, but also to help © 2021 Arizent and American Banker. were focused on “maintaining trust and support a broader social mission. Keeping All rights reserved.

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