WEDNESDAY JUNE 9, 2021 VOL. 186 No. 109 AMERICANBANKER.COM Follow us on Twitter @AmerBanker Taking cue from fintechs, 5 warm to early Capital One and a few others are emulating High hurdles upstarts like Chime and Varo, which let A majority of LGBTQ people say they've faced financial customers access their paychecks two days before payday. But loss of overdraft income hardships because of their sexual orientation or gender and potential liability for errors dissuade identity, according to a 2018 survey many banks from changing their ways. Page 7 See story on page 3 Venture capital fund plays Experienced financial challenges because of LGBTQ status (62%) 6 role of -fintech matchmaker The Curql Fund, an investor in upstart Struggled to maintain savings (44%) technology companies, is trying to help credit unions build relationships with cutting-edge firms.Page 8 Were passed over for a job (12%) JPMorgan hires from Incurred greater housing costs because of discrimination (11%) 7 Goldman, Wells for new growth-equity effort JPMorgan Chase hired executives from Earned a lower salary or had fewer opportunities for promotion (10%) Goldman Sachs Group and Wells Fargo to run a new arm focused on growth-equity investing and direct lending, as it seeks to Source: Experian survey of 500 adults who identify as LGBTQ give clients exposure to companies before they go public. Page 9

 of England wants Beyond waving a rainbow 8 tight regulations for dailybriefing 3 flag: How banks can digital currencies support LGBTQ communities The U.K.’s says stablecoins Former U.K. regulator Many banks make outward gestures of should follow the same rules as traditional 1 calls for measured solidarity with their LGBTQ customers and bank deposits. Page 9 climate change transition employees. But queer folks have real and Mark Carney, a onetime Bank of England distinct banking needs that aren’t being met. Hospital system upgrades governor, argued that banks should not cut (See chart above.) Page 3 9 payments tech to improve ties with polluting businesses, but rather collection, security work with clients to help them minimize FHFA veteran reflects Emory Healthcare of Atlanta is using their impact on the environment. Page 2 4 on 20 turbulent years RevSpring’s platform, which allows patients in housing finance to key in card data that is shielded from Fed announces date For two decades, Alfred Pollard served as customer service representatives. Page 10 2 2021 stress test results the general counsel for Fannie Mae and Nineteen of the nation’s largest banks plus Freddie Mac’s regulator. He had a front-row Bankers must recognize four smaller firms will be tested against seat for the establishment of the Federal 10 a new ‘standard of baseline and severely adverse economic Housing Finance Agency, the government’s care’ in fair lending scenarios. The central bank will release subsequent seizure of the mortgage giants Math-based machine learning tools hold details on their performance on amid mounting losses in 2008 and the substantial promise in advancing the June 24. Page 3 more recent legal dispute over the FHFA’s fairness of consumer lending, Theodore Flo authority. Page 5 of Zest AI writes. Page 11 WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 2

bank’s purview. income and capital markets business. CLIMATE CHANGE At the same time, banks have come under Carney focused his remarks Monday fire from environmental activists who want on steps that policymakers can take in the them to stop financing fossil fuels altogether. short term to produce fast results in the fight Former U.K. Carney, who was promoting a new book, against climate change. Such efforts can help expressed support for a more nuanced generate and sustain momentum, he said. regulator calls approach, in which banks continue to work “It does put a premium on measures that with corporate clients to help them minimize have an immediate payback on jobs and their impact on climate change. economic growth,” Carney said. for measured Indeed, many bankers have started Retrofitting homes to make them more thinking more seriously about the various energy efficient might be one example. “You climate business opportunities that arise from a do those things early that have tangible transition to a low-carbon economy. At benefits, affect a lot of people, create a lot of an industry conference last week, Bank of jobs, and you say this is what it’s about, as change America CEO Brian Moynihan said that opposed to everybody having to eat lentils.” his company is increasingly working with But Carney also argued that policymakers transition middle-market clients that have made net- need to push for tougher regulation that will zero commitments. also spur further investment in infrastructure By Laura Alix “What does that really mean? That means upgrades and renewable energy. He gave the June 07, 2021 there’s an opportunity to finance a series of example of the U.K.’s plan to ban the sale of Mark Carney, one of the leading global activity changes over the next 10, 20, 30 years internal combustion engines by 2030, which voices on the risks that climate change poses to allow them to get to net-zero,” Moynihan lawmakers there hope will spark greater to the financial system, said transitioning to a said at the Bernstein Strategic Decisions investment in the production of electric low-carbon economy should not be an all-or- Conference. “There’s a huge business vehicles. nothing proposition. opportunity because it’s being driven by Transitioning to a low-carbon economy In a talk Monday hosted by the Brookings consumer and corporate demand.” is also a matter of global competitiveness, Institution, the former Bank of England Seventy percent of finance officers at Carney said, noting that that “has not been governor discussed the role that financial companies with at least $1 billion of revenue lost on other major economic powers.” institutions can play in fostering the reported in a recent U.S. Bancorp survey that “We’ve left this issue very late, so the scale transition, and outlined a strategy for their focus on environmental, social and of what needs to be done is enormous,” he balancing short- and long-term initiatives. governance issues had increased over the said. “That’s true for virtually every country.” “What we want to avoid is a very binary past 12 months. approach, in which there are green assets and “I don’t think it’s a coincidence that brown assets, and we get rid of all the brown some of the largest companies in sectors and go to the green,” Carney said. “That’s not and industries facing some of the largest a transition. … That won’t get us to where we challenges when it comes to sustainability are need to go.” paying the most attention to it,” said Marcus Carney, who is currently the United Martin, head of ESG for U.S. Bancorp’s fixed Nations’ special envoy on climate action and finance, was warning about these risks long before they became a hot topic in U.S. Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 financial regulatory circles. Phone 212-803-8200 AmericanBanker.com In 2015, as chairman of the Financial Stability Board, he established the Task Force Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 for Climate-related Financial Disclosures, Managing Editor Dean Anason 770.621.9935 which encourages companies to disclose Reporters/Producers their climate-related risks. As governor of the Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 Bank of England from 2013 to 2020, he led Washington Bureau Chief Joe Adler 571.403.3832 early efforts to incorporate climate risk into Executive Editor, Technology Miriam Cross 571.403.3834 stress testing. Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 In the United States, the role that financial BankThink Editor Rachel Witkowski 571.403.3857 regulators should play in combating climate John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 change has become politically charged. As Hannah Lang 571.403.3855 the has begun to assess Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 climate risk in the financial system, it has Digital Managing Editor drawn criticism from Republican lawmakers Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 who argue that climate is outside the central

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better assess how the bank might actually Eastern Bank’s billboard effort is a STRESS TESTS perform under the same conditions. Each good study for banks that want to support test examines a bank’s performance over their LGBTQ neighbors, customers and nine future consecutive quarters. employees. Fed There’s a robust business case to be made for greater inclusivity in general, but announces LGBTQ reaching underserved communities can be tricky. Banks would be well advised to bring in members of the community and give date for 2021 Beyond them a say in the decision-making process, though they can also draw on their own stress test waving a expertise and resources in helping to solve some of the financial issues many queer people wrestle with. results rainbow flag: The industry has come a long way in the past few decades in its By Hannah Lang How banks outreach to the LGBTQ community. Many June 07, 2021 larger banks now have affiliate resource WASHINGTON — The Federal Reserve groups for LGBTQ employees and offer announced Monday it will publish the results can support medical benefits for same-sex couples, for both of its annual stress tests on June 24. and some even offer transgender-inclusive Nineteen of the biggest banks will be LGBTQ health care benefits. subjected to the Dodd-Frank Act Stress Tests Some have even thrown their efforts and and the Comprehensive Capital Analysis and dollars into lobbying for public policies Review examinations, plus four smaller firms communities aimed at making the world safer for LGBTQ that have chosen to opt in: BMO Financial people. Bank of America vocally opposed Corp., MUFG Americas Holdings Corp., RBC By Laura Alix North Carolina’s so-called bathroom bill in U.S. Group Holdings and Regions Financial June 07, 2021, 2016 and encouraged its own employees Corporation. When former President Donald Trump to talk about the issue. In 2018, Eastern Under rules the Fed finalized in 2019, issued an executive order banning Bank rallied the Massachusetts business banks with assets of between $100 billion transgender people from serving in the community in support of the state’s and $250 billion are only required to undergo military in 2017, Eastern Bank in Boston transgender protection law when it came up stress tests every other year. However, those wanted to do something about it. for a vote. banks can choose to opt in to a stress tests in The $17 billion-asset Eastern, which But there are still ways that the banking an “off year” if they wish to make changes to has a long history of supporting LGBTQ industry could do more. Queer Americans their capital distribution plans. causes, initially hit on the idea of putting still face structural inequalities in their day- Banks subject to the stress tests are up billboards declaring its support for to-day lives, and that very often translates required to submit data from their balance transgender service members — perhaps into financial difficulties and higher rates of sheets as of yearend 2020. The Fed tests those even finding a transgender veteran willing poverty. With their expertise and resources, balance sheets against baseline and severely to be photographed for the spot. But after bankers are in a unique position to help adverse scenarios. talking with both LGBTQ and veteran close that gap. Merely draping bank logos in This year’s round of tests are expected to employees, the bank decided to move in rainbow colors for the month of June is not provide another glimpse of how banks have another direction, said Paul Alexander, its enough — in fact, without more substantial weathered the coronavirus pandemic. chief marketing officer. efforts behind it, such a gesture could be The harshest scenario banks will be “That could be dangerous for that criticized as woke-washing. tested against this cycle is elevated stress in individual. All of a sudden, this person’s the commercial real estate and corporate picture is up there, 20 feet by 15 feet for A competitive advantage debt markets along with an intense global all the world to see,” he said. “You have Many executives say there is a common- recession. In that severely adverse scenario, to be careful that in your eagerness to be sense rationale for meeting the needs of the banks would have to account for a rise in supportive, you’re not hurtful.” LGBTQ community — it’s not about simply the U.S. unemployment rate by 4 percentage Instead, Eastern went with white text on doing the right thing. points to 10.75%. a blue background reading “Good salutes A little less than 6% of the U.S. population The Dodd-Frank Act Stress Test examines all who serve our country. All,” with “All” identifies as a member of the LGBTQ a bank’s balance-sheet performance under shaded in the pastel pink, blue and white — community, but their friends and families the scenarios using a standard capital representing the transgender pride flag. The make up a much larger chunk of the management plan. Meanwhile, CCAR uses slogan was meant to fit with the bank’s long- populace. Word-of-mouth can be a powerful the bank’s own capital management plan to running “join us for good” campaign. marketing tool, and historically overlooked

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 4 communities can become loyal customers because of their hair. Appealing to LGBTQ customers or potential if companies treat them right. If traditional customers requires a different strategy than banks won’t do it, then newer entrants to the ‘Just let people be people’ appealing to, say, football fans — you can’t market will. In some ways, Eastern Bank’s own history just wave a rainbow flag and call it a day. “I think we are starting to wake up to shows that it can pay for a bank to be ahead Banks need to tailor banking products to the the fact that inclusivity is a competitive on these issues, but also that bona fides have LGBTQ community. advantage,” said Billie Simmons, co-founder to be earned over time. Some have drawn on concrete statistics to of Daylight, a digital banking platform for Eastern Bank ramped up its focus on make their pitch to LGBTQ customers more LGBTQ people. “If you don’t want to lose all the LGBTQ community in 2011 when it appropriate. For instance, queer customers of your customers to the neobanks, you’ve acquired Wainwright Bank and Trust in have higher levels of student debt and less got to get competitive.” Boston. Wainwright had begun to cultivate financial support from their families. If they It also matters for talent acquisition and relationships with the local gay and lesbian want to start a family, adopting or conceiving retention. communities in the early 1990s when its a child tends to be more expensive for same- Younger generations, particularly Gen Z, social justice-minded founders brought on sex couples than for a heterosexual couple. are more accepting of a broader spectrum Brenda Cole as a board member, making Transitioning means higher medical bills. of gender identity. Not only that, but they Cole one of the first openly lesbian directors All these expenses can put LGBTQ people possess a wealth of tech savvy that banks will of a public company. behind on saving for retirement — and when need in their workforces to stay competitive “All we did was make people feel that time comes, they may need to retire to in the marketplace. comfortable,” said Jan Miller, who was an area with a higher cost of living or to a Fostering a more inclusive and diverse Wainwright’s CEO. “They could come in as a queer-friendly retirement home. workforce will be important to attract that gay couple and apply for a mortgage as a gay These are just some of the issues Simmons talent, said Girish Ganesan, global head of couple. ... There were so many things that and her co-founder Rob Curtis took on diversity and head of U.S. talent at TD Bank. today seem so archaic.” last year when they founded Daylight, a “The workforce of the future will be these Among its efforts: Wainwright offered forthcoming challenger bank aimed directly Zoomers,” Ganesan said. “They are very benefits to same-sex couples as early as at queer customers. In addition to a checking good at researching an employer before they 1994. It advertised in local gay and lesbian account, Daylight will offer financial even start to buy a product from them or papers. When it had around $300 million coaching for the financial situations LGBTQ work for them.” of assets, Miller said, it launched a credit people encounter, as well as a dedicated Internally, TD Bank provides its card that allowed customers to donate 1% of online community. It’s imperative to bring employees with forums where they can talk their spending to any of a dozen nonprofits, people from the LGBTQ community into the candidly about their experiences being who most of which had a gay or lesbian focus. decision-making process, Simmons said. they are — whether that relates to gender, Over time, it financed more than 80% of “It does so much for brand authenticity, sexuality, nationality or disability status. housing for people living with HIV and AIDS for product authenticity,” she said. “You’re When the COVID-19 pandemic struck, in the city of Boston through its community actually empowering parts of the community the $401 billion-asset bank moved that development lending business. to help themselves, and you’re also paying content online, which presented both a “It had to make sense financially in order them a wage to do it.” test and an opportunity. Moving to a virtual for us to do it,” Miller said. “We couldn’t forum allowed employees to connect with afford to do this just because it was the Do no harm each other across geographies, but TD right thing to do, but it was good business. While the financial services industry has executives had to find a way to make that We generated a lot of customers out of that progressed in meeting the needs of LGBTQ content “borderless” and accessible to a business.” people, tact is crucial when interacting with broader range of participants, Ganesan said. Wainwright had a little over $1 billion any historically marginalized population. Naomi Mercer, senior vice president of assets when it was acquired by Eastern, This is especially true of transgender and of diversity, equity and inclusion for the which paid twice Wainwright’s book value nonbinary people, who can confront added American Bankers Association, said banks in the deal. Analysts also noted Wainwright’s complexities associated with changing their should think about diversity in the broadest pristine credit quality. Now chief commercial name or pronouns. sense possible — including people with banking officer at Eastern, Miller admitted Consider the phenomenon of people disabilities, neurodiverse people and that at the time, he wondered if Wainwright’s displaying their pronouns in their email veterans. strong social justice brand would be diluted signatures, social media handles or on Zoom. In addition to other recent workplace in the merger. But he was pleased to see It’s fine to present your own pronouns, and improvements, Mercer said some banks Eastern pick up the baton and run with it, some even say that when cisgender people are also updating their dress codes to be he said. do so it helps to normalize the practice for “appropriate and professional” without “It does seem like a no-brainer today, but trans and nonbinary people. But mandating discriminating against any particular group. just let people be people,” he said. “Let them that everybody do so, even in a somewhat That can include, for example, gender- be their individual selves.” relaxed setting, can backfire. nonconforming people and Black women, Banks seeking to make inroads with the “If they are transitioning, putting who often experience discrimination LGBTQ community have to be circumspect. someone on the spot may not be a good

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 5 idea,” the ABA’s Mercer said. “It’s good to has the authority to fire FHFA Director Mark signal that we’re open to learning someone GSEs Calabria, and whether shareholders of the else’s pronouns, but we’re not going to ask.” GSEs have a claim on profits that have been Another example: When Simmons, who swept into the Treasury. is trans, updated her legal name, her credit FHFA veteran “There are all kinds of possible outcomes score essentially “split into two.” Or in other to the case,” said Pollard, who was a behind- words, her credit report sometimes pulls her reflects on the-scenes player leading the FHFA team previous name, often referred to as a “dead” litigating the case. “As to the impact on name. That kind of bureaucratic quirk can FHFA or the regulated entities, it remains expose transgender people to housing 20 turbulent uncertain.” discrimination if they are applying for an Pollard, who spent eight years as a bank apartment. years in lobbyist before being hired in 2001 as And when she applied for a OFHEO’s general counsel, wins high marks with her new legal name, some of the bank’s from former colleagues for having navigated correspondence still used her dead name. housing so many changes at both agencies. During While some transgender customers might his tenure at OFHEO and then the FHFA, simply find that disrespectful, others could finance he served under a total of seven different actually be endangered by receiving physical directors. mail showing their dead name, particularly By Kate Berry “To be general counsel for that long if they aren’t out to their neighbors. June 07, 2021 through that many different directors and One way that Daylight — which is still During prolonged upheaval in how the so many momentous events, it’s really in beta mode — handles that is by only government regulates Fannie Mae and quite remarkable,” said former acting FHFA requiring the customer’s legal identification Freddie Mac, a constant at the Federal Director Ed DeMarco, who led the agency during onboarding, Simmons said. It offers Housing Finance Agency for more than a from 2009 to 2014 and is president of the customers a in their chosen name decade was its top lawyer. Housing Policy Council. “Alfred was there to and also forgoes the use of names in much Alfred Pollard, who has been at the serve the agency and the director, whoever of email correspondence, where it isn’t forefront of housing finance issues for 20 the director was. We brought our own style necessarily needed. years, retired in April as the FHFA’s general and philosophy and yet he successfully “We care deeply about trans and counsel. He had held the the job since 2008, served each of us and I think that’s because nonbinary people, regardless of whether when the agency was established, and was he was successfully serving the law.” they’re our customers or not. We want to previously the top lawyer at its predecessor The following is from a conversation with see this product feature stolen by other agency, the Office of Federal Housing Pollard that has been edited for length and incumbents,” Simmons said. “Trans people Enterprise Oversight. clarity. deserve choice of products and they deserve Pollard discussed having a front- to have their identities recognized with row seat to some of the pivotal financial How do you predict the Supreme Court dignity.” events of the past 20 years: the accounting rule could rule in Collins v. Yellen? Making one’s LGBTQ customers and scandals that wracked Fannie and Freddie ALFRED POLLARD: This is a complex employees feel seen and welcome requires in 2003, the financial crisis of 2008 and case in the form it came to the [Supreme] sensitivity and accommodation that banks, the conservatorship of the government- Court from the 5th Circuit. The case focused or most commercial businesses for that sponsored enterprises just six weeks after on two main issues. First was whether the matter, have rarely exhibited in the past. And Congress created the FHFA from the remains statutory provision setting removal of an with customers increasingly aware of and of OFHEO, to name just a few. FHFA director for cause, as opposed to at critical of their banks’ values, banks have to Those turbulent years were “like a balloon the will of the president, was constitutional give more thought to striking the right tone that kept being inflated,” he said in an and, if it was not constitutional, what did and sending the right message. interview with American Banker. that mean for actions taken by the agency. “Many elements of diversity, equity and And he left the agency with housing And second, should the plaintiffs have a inclusion are structural, so the solutions finance oversight still in a state of right to vacate the third amendment to the also have to be,” Ganesan of TD Bank said. uncertainty. Nearly 13 years after Fannie [preferred stock purchase agreements, or “They can’ just be programmatic, and that and Freddie were placed under government PSPAs] under a variety of legal theories they includes showing up for Pride but then control, they remain the wards of Uncle Sam. had raised and should that issue return to not doing anything to support the LGBTQ More than a decade after policymakers the lower courts for further consideration. community.” appeared to reach a consensus that the GSEs The hearing on the case produced a needed to be overhauled, there is still little wide range of questions from the justices if any agreement between the parties about and it reflected the complexity of the how to do that. positions taken by the government and by Meanwhile, the Supreme Court is poised the appealing plaintiffs. It appeared every to rule any day on whether the president issue raised intense interest and the justices

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 6 pressed hard on the solicitor general, the conservatorships. There were plenty of 20- enterprises to undertake programs for plaintiffs and the amicus arguing in favor hour days, not just at FHFA, but at Treasury financial displacements such as in 2008 of the constitutionality of the “for cause” and the Federal Reserve. It was a hectic time or natural disasters had come together removal provision. The hearing appeared to because as soon as the conservatorships into a “tool kit” that put FHFA and the last as long as the hearing for the Affordable were in place, the next week the Lehman firms in a very good position for dealing Care Act case and that reflected, I think, the Brothers bankruptcy occurred and that with the current COVID-19 pandemic. complexity confronting the court and the set the country into the heart of a systemic While additional steps were added, the significance of the constitutional issues. event. Once the conservatorships were in foundation was there. Director Calabria There are all kinds of possible outcomes place, the immediate focus was on trying to has been a leader in addressing pandemic- to the case. As to impact on FHFA or the keep homeowners in their homes. related issues for homeownership and for regulated entities, it remains uncertain. With support from the agency directors multifamily housing and in working with There are several other court cases beyond over the years, the legal department sought other government agencies. Collins and they have considered the same to assure it could respond to ever-increasing issues and are awaiting the court decision as demands for robust advice for the agency What is the greatest risk in the housing well. So there will be a decision and many and regulated entities. The complexity market? possible outcomes and potential impacts, facing the lawyers always appeared to I believe that more can be done to inform but for now my best comment is, we’ll see. increase. For example, we filed 18 lawsuits consumers of what they are undertaking in 2011 against the biggest banks, where with a home purchase and a mortgage. What is your prediction on when Fan- FHFA recovered $25 billion on private-label We have legal protections in place for nie and Freddie will exit conservator- securitizations over a seven year period. homeowners, but financial education varies ship? This included not only work by our lawyers across the country. In the 2008 financial My standard line is that the last thing I but as well oversight by them of the work of crisis many purchased homes they could predicted was President Jimmy Carter getting outside counsel. not afford. Going into the crisis, the market reelected in 1980. Everybody is speculating led home purchasers to the idea of a home right now. Exiting conservatorship has a lot of You dealt a lot with homeowners try- as a get-rich-quick investment rather than moving parts involving FHFA, the Treasury, ing to avoid foreclosure during the fi- the traditional view of a home as shelter the legal structures of conservatorship nancial crisis. What lessons from that with a gradual accumulation of value. The and you have the PSPAs and whatever role experience can be applied to forebear- dollar amounts involved with mortgages Congress might wish to undertake as well as ance issues arising from the COVID-19 and home purchases are significant and the what changes might be made if any to the pandemic? need to understand what the commitment business models of the [GSEs]. The key for I remember flying to Boston during being undertaken means for the individual me is that FHFA should be a core player in the financial crisis when acting Director or family is critical. any decisions on administering an end or a DeMarco had indicated he did not want to I think consumers need to be armed with transition from the conservatorships. FHFA do undertake principal forgiveness. FHFA the right questions. There are questions has a knowledgeable, experienced and very had deployed numerous other refinancing that everyone should ask. So beyond the diverse supervisory and legal staffs and that mechanisms. I went to a union hall and I many disclosures consumers receive for a infrastructure needs to be tapped whatever walked in the room that was supposed to home purchase, they should be able to ask choices are discussed. have three people [there] and found 95 folks questions of what costs will be beyond the yelling and objecting as soon as I sat down. mortgage. Should Fannie and Freddie be privat- But it was a worthwhile meeting as after a ized? time individuals came forward with specific What is your view of electronic notari- When you say privatized, they’re complaints and items where assistance zations and efforts to eliminate paper private companies now, but they’re in from FHFA was occurring. I think we made in the mortgage industry? conservatorships. They have preferred and progress. I think paper is good. But a paper- common shareholders that are holding During that crisis, I had phone calls with based system can see some improvements shares that don’t get dividends or get to vote. death threats. We had individuals calling while providing certainty for lenders, time and again to the agency and screaming homeowners, local governments and It has been a turbulent 20 years first at the secretaries, something I would not even judges if we have a tested and secure at OFHEO and then the FHFA, punctu- tolerate. I had those calls sent to me and electronic mortgage environment. The ated by the 2008 housing crisis. What I warned them against such actions and need for it was evidenced by Hurricane will you remember the most? then went on to learn what their particular Katrina and the flooding of the courthouse I can speak as to the legal department. situation was and sought to find out if basement where folks could not access their When we hit 2008, we had a national crisis anything could be done. What clearly came ownership documents to secure emergency and a lot of issues presented to the legal through, if there had been any doubt, was funding. department which included standing up the premium everyone has on owning a My concern is that we are moving activity a new agency at the same time we had to home. by activity, looking at each element of the support planning and imposition of the FHFA experience with directing the system individually. It would be better to

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 7 have a look down at the entire process and have embraced early direct deposit to appeal for making billions in overdraft fees in 2020. related documentation. Service providers to consumers, who are increasingly drawn The senator singled out Jamie Dimon for have produced mechanisms for electronic to an expanding field of consumer-friendly the $1.5 billion JPMorgan Chase made in signatures, computer-based appraisals and neobanks. 2020 from overdraft fees — more than any remote notarization and these are adopted Typically, for people who get paid every other bank, including Wells Fargo and Bank in many localities. E-mortgages exist in other Friday, banks receive payroll files of America, which collected $1.3 billion and small numbers. But, the work has not been from providers like ADP and Paychex on a $1.1 billion, respectively, according to filings completed and is not comprehensive. Wednesday and make those funds available with the Federal Deposit Corp. The negative right now is all this hacking to customers that Friday. Several fintechs Dimon told Warren that his company and data breaches that continue to occur, make the funds available to customers as waived the fees for customers “upon which raise questions and challenges. soon as they receive that file. Recently, Capital request.”When asked by Warren whether the Bankers have a very good record addressing One and a few other banks have begun doing bank would return overdraft fees to customers moving all of this paper to reduce the cost the same. that it collected during the pandemic, over time and to provide secure systems. Getting paid on a Wednesday or a Dimon said, “No.” When Warren asked other I think the various steps taken so far are Thursday instead of a Friday might seem CEOs on the panel if they good, but a full perspective from the pre- like an insubstantial change. But for people would do the same, none volunteered an mortgage documents to the sale of a home barely making ends meet, “getting access to answer. and the intervening steps would be a better your money closer to when you earned it is A JPMorgan spokeswoman contacted for approach now. an important step,” said Aaron Klein, senior this article said the company is considering fellow of economic studies at the Brookings offering early direct deposit. Institution in Washington. “It will make a big “It’s one of a number of solutions we’re CONSUMER BANKING difference for a small number of people.” considering to help with the customer Nine percent of consumers account for experience, but it’s too soon to share more at 80% of overdraft fees, according to Brookings this stage,” she said. Taking cue Institution research. A Wells Fargo spokeswoman pointed Early pay is not to be confused with early to Overdraft Rewind, a service the bank from fintechs, wage access or earned wage access, through launched in 2017 to help customers who have which fintechs and third parties like Even, their paycheck deposited directly in the bank PayActiv, DailyPay, Branch and Earnin avoid certain overdraft charges. The bank banks warm provide small to employees based on reviews the 24 hours before the paycheck their next paycheck. These programs are funds were made available and reverses some to early direct sometimes controversial for their payday- overdraft fees. This feature is “tremendously -like aspects: Some charge high interest useful,” Klein said. rates or require “tips” that end up being In the first quarter of 2018, Wells Fargo deposit equivalent to high fees. Also, customers can reported a $73 million decline in deposit overextend themselves and have to borrow service charges from the previous quarter, By Penny Crosman more to keep paying their bills. “driven largely by the impact of customer- June 08, 2021 These offerings are part of a broader friendly initiatives including the first full- A small number of banks have begun effort among some financial providers to quarter impact of Overdraft Rewind,” Chief offering early direct deposit — a move that help consumers avoid incurring overdraft Financial Officer John Shrewsberry said in an will cost them revenue in the short run but fees. Last week Ally Financial eliminated earnings call. could help them preserve market share and all overdraft fees. In April, PNC Financial A Bank of America spokesman did not strengthen their public image over the long Services Group launched a Low Cash Mode respond to a request for comment. term. digital service that signals account holders This service, which is sometimes called when their balances are about to go negative The case for early direct deposit early pay, lets customers access their and gives them 24 hours to block transactions Capital One, which is based in McLean, paycheck a day or two sooner than normal to or add funds before fees are assessed. Some Virginia, in April began letting funds from avoid overdraft fees or the need to turn to a challenger and commercial banks, including certain direct deposit transactions be payday lender. Huntington Bancshares, use artificialavailable for use up to two days early. Early direct deposit has been made intelligence to analyze customers’ cash flow “From listening to our customers, we know popular in the past decade by challenger and upcoming bills and offer a heads-up that that early direct deposit access and broad banks like Chime, Varo and One, though they are on the brink of overdrawing. digital offerings are what consumers want a few community banks have offered it for Politicians and consumer activists have and need to feel confident in their financial years. Many traditional banks have been long criticized banks for preying on the journey,” said John Durrant, executive unwilling to give up the overdraft fees they vulnerable to bolster noninterest income. vice president of retail and small-business can reap in the days leading up to payday. But During a recent hearing, Sen. Elizabeth banking at the $425.2 billion-asset company. some — including Capital One Financial — Warren, D-Mass., rebuked large-bank CEOs “As one of the first large banks to offer early

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 8 direct deposit, we’ve already helped over a days ahead and say the settlement is not now million customers access their paychecks but in the future, is itself an archaic leftover CREDIT UNIONS early and our hope is that this change will from the days when people used to truck big allow them to stress less about money and magnetic tape drives around,” Karkal said. focus more on their financial and personal Large banks tend to hold the money as Venture well-being.” long as possible, Karkal said. This is not for OneUnited Bank, a $650 million- the benefit of float, because interest rates capital fund asset community development financial are so low. It is, multiple industry observers institution in Boston; the $4.5 billion-asset say, to obtain overdraft fee income from LendingClub Bank, formerly Radius Bank, people who struggle to pay their bills or meet plays role which is now a unit of San Francisco-based unexpected expenses during the day or two LendingClub; Randolph-Brooks Federal before payday. of credit Credit Union in Live Oak, Texas, which has “A lot of people live paycheck to paycheck, $13 billion of assets; and the $2 billion-asset and they’re not all low-income people,” Andrews Federal Credit Union in Suitland, Karkal said. Even people with large, six-figure union-fintech Maryland, also offer early direct deposit. incomes end up with $20 or less at the end of None of these responded to a request for an each pay period, he said. matchmaker interview. There have always been some small These banks offer early direct deposit to banks and credit unions that didn’t have By Ken McCarthy compete with neobanks like Chime, Varo and the capability to store an ACH file from June 04, 2021 One that make paychecks available within Wednesday to Friday, Karkal said, because Because of their smaller size and scale five minutes, according to Shamir Karkal, co- their systems wouldn’t allow it, so they would relative to banks, many credit unions find it founder of Simple, a former BBVA executive just make the money available right away. hard to draw the attention of fintechs. A new and current CEO of the fintech Sila Money. “What’s the risk to them of giving access to venture capital offering has set its sights on “People love the early direct deposit,” the money early? There isn’t any,” Karkal said. fixing that problem. Karkal said. “Do you want to get your “For the receiver, if Paychex or ADP sent you The Curql Fund, which announced its paycheck on Friday? Or do you want to get a payroll ACH entry on Wednesday and you first close in April, now has 30 credit union it on Wednesday at 4 p.m.? Why would I not post the money on Wednesday, you’re going investors and has raised more than $100 want my money? It’s a very tangible thing. to get settlement of the funds from the Fed on million. Everybody who gets a paycheck gets it. And Friday.” The fund launched in 2020 and is managed it’s a big reason for people to switch accounts The odds of errors or fraud in payroll files by Next Level Ventures, the largest investment from a traditional bank to Chime or Varo.” are small, Karkal said. firm managing credit union assets, in It’s possible that a payroll provider could collaboration with the credit unions in the Why aren’t more banks doing this? make a mistake and include a paycheck to Members Development Company CUSO. Banks contacted for this story declined an employee who has left the company, and It is steered by a group of former founders, to discuss their reasons for not offering for that person to spend that entire amount operators and leaders in the fintech and VC early direct deposit. But a recent request for immediately, so that when the payroll spaces. information issued by Nacha, the large-bank- company asks for an ACH reversal the money One of its participants is the $7.3 billion- led organization that runs the ACH network, is gone. asset Idaho Central Credit Union in Chubbuck, stated some objections to the concept. “But it is a vanishingly small problem,” Idaho. CEO Kent Oram said the company is In that document, Nacha says that because Karkal said. His company has run hundreds proud to partner with other forward-looking there could be errors or fraud in payment of thousands of payroll transactions, and he’s organizations by investing in the Curql Fund. files, banks need several days of settlement never seen it happen. “By ourselves, it is difficult to make time in which to claw back the funds. Nacha In Karkal’s view, if a payroll provider made inroads into the fintech world. By combining is considering changing its rules so that a mistake, it should be liable for the loss. resources, we expect to cultivate relationships receiving banks that make funds available If Nacha changes its rules to make and solutions to improve the offerings we offer early will take the loss for any errors or fraud receiving banks liable for problems with ACH to our membership,” Oram said. on payments that they have dispersed. payments, it could cause the partner banks Next Level recognized a need to provide When payroll processors like ADP and of Chime and other challenger banks to stop access to technology for the continued growth Paychex send a payroll file to a bank on a supporting early direct deposit or to charge and stability for the credit union industry, Wednesday, they stipulate a settlement date more for it. according to NLV Managing Partner Craig of that Friday, meaning the funds must be Nacha did not respond to a request for an Ibsen. available to the customer by Friday morning. interview. “The simple fact that this fund was created According to Karkal, the bank that receives “If everybody could get their paycheck 48 and credit unions are coming to the table as that file could make those funds available hours earlier, I wouldn’t be surprised if half investors at a faster pace than we anticipated immediately or wait until Friday. the payday industry died right there,” Karkal is a clear indication of the importance the “The fact that you can send the file two said. industry is placing on technology,” Ibsen said.

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Chris Otey, chairman of South Bay Credit robust digital services and remain competitive Inc. and Uala, was most recently co-head Union in Redondo Beach, California, said in the financial services industry,” she said in a of Goldman Sachs Investment Partners’ any fintech involvement is good for the credit press release. venture-capital and growth-equity team. union movement. The venture also named Osei Van Horne “Understanding which fintech solutions are managing partner and global head of out there to eat your lunch, sell you lunch or RECRUITING sustainable growth-equity investing. Van eat lunch with you is a tall task,” said Otey, who Horne has backed companies including is also chief revenue officer for the firm CU Flexport, BMC Software and Industrious 2.0, which works to match credit unions and JPMorgan and was until earlier this year a managing fintech solutions. director and co-founder of Wells Fargo The Curql Fund — and others like it — have hires from Strategic Capital. He’ll also lead Project Black, the potential to start leveling the playing field an partnership between JPMorgan and Ariel for credit unions, Otey said. CUNA Mutual Investments that aims to invest in minority- Group launched CMFG Ventures in 2016 as Goldman, owned middle-market businesses in an its venture capital arm focused on strategic, attempt to close the racial wealth gap. early-stage investments in the credit union, Wells for new An existing private-debt arm managing financial services and insurance industries. $15 billion and led by Meg McClellan has “As we see financial services broken been folded into JPMorgan Private Capital. down into their smallest parts by the fintech growth-equity McClellan will build out a direct-lending solutions specializing in these small parts business initially focused on middle-market of the industry, banks and credit unions are effort companies in North America, Carlin said, faced with building their own solution to describing it as a “tremendous opportunity”. compete, partnering with fintechs to provide By Bloomberg News Rick Smith, previously head of private those solutions or buying solutions,” he said. June 07, 2021 investments at JPMorgan where he oversaw “Credit unions should be leveraging their JPMorgan Chase hired executives from balance-sheet investments, has been named cooperative ethos to help the industry as a Goldman Sachs Group and Wells Fargo to chairman of JPMorgan Private Capital. Joining whole move forward and remain competitive.” run a new arm focused on growth-equity as a partner is Patrick McGoldrick, formerly Curql offers a key competitive advantage as investing and direct lending, as it seeks to give global head of Morgan Private Ventures, an the gateway for fintech access to credit unions clients exposure to companies before they go arm within JPMorgan that aims — and the only gateway that can deploy public. to invest in “next-generation” companies. money at the speed of a VC, Ibsen said. “We’re very excited about the opportunity The new unit sits within JPMorgan Asset Vincent Hui, managing director at bank to deliver capital and advice to innovative Management’s global alternatives division, consultant Cornerstone Advisors, said it companies,” Brian Carlin, chief executive helmed by Anton Pil, which oversees around will be interesting to see how many credit of JPMorgan Private Capital, said in an $168 billion. unions can invest in the fund and others like interview. “We have access to meaningful it because they may not be considered an data from consumer banking, commercial allowable investment by regulators. real estate and other operations that portfolio COMPLIANCE “Having said that, CUs are investing in companies can benefit from.” CUSOs where fintechs have a big role, like The U.S. had about 5,800 public companies VyStar’s investment in the Nymbus CUSO,” he in 2020, a drop from more than 8,000 in 1997, Bank of said. he said. That’s driven in part by an ample Hui said larger credit unions like the pool of private capital, which is growing amid England $10.7 billion-asset VyStar Credit Union in demand from institutional investors lured by Jacksonville, Florida, have not consistently had promising returns. trouble accessing fintechs, but their smaller Growth-equity checks will typically range wants tight peers may have some difficulty getting their from $25 million to $75 million, Carlin said, attention due to their size and the amount of and the firm will seek to invest alongside regulations business that can be generated. institutional and private-bank clients. The Michigan State University Federal Credit business was conceived before the pandemic Union in East Lansing, Michigan, was an early and gained support from the firm’s operating for digital investor in the Curql Fund. President and CEO committee including asset- and wealth- April Clobes said the $6.2 billion-asset credit management chief Mary Erdoes. currencies union thinks the fund creates opportunities JPMorgan Private Capital named for credit unions to collaboratively make Christopher Dawe managing partner and By John Adams investments in fintechs to enhance their global head of growth equity. Dawe, who June 07, 2021 members’ experiences. has led investments in companies including As more digital currency projects come to “By partnering with fintech, we can provide Spotify Technology SA, Plaid, Compass market, the Bank of England wants to ensure

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 10 that stablecoins — which are designed to be complexity of the country’s banking system collection efforts,” Marcus Powell, a revenue equal in value to government currencies — make the process more complicated than it cycle manager who monitors payments and should be regulated under the same rules as would be in other nations. self-serve offerings at Emory Healthcare, said traditional money. The BOE did not answer questions in an emailed statement. Emory operates 11 The BOE on Monday said it expects about how regulations could help private hospitals and 250 medical provider offices. stablecoins to offer a one-to-one redemption stablecoins and central bank digital “Our staff no longer has to activate an with traditional currency accounts at all currencies work together, and it did not application to capture the payment nor key times with a “robust” legal claim. address regulations for cryptocurrencies. the credit information now that assisted Stablecoins are designed as a hedge In the U.S., the Office of the Comptroller of payment options are available, which keeps against volatility for cryptocurrencies such the Currency in January said national banks them free of downtime for application issues as bitcoin. The BOE refers to stablecoins could use stablecoins and distributed ledgers and more readily available for the next as private-sector digital tokens that aim to to process payments, arguing decentralized patient,” Powell said. maintain a stable value in relation to national payments is part of banking’s continuing RevSpring’s deviceless payments platform currencies. evolution in moving funds. has a new SafeMode feature that removes These stablecoins should be subject to card credentials from the health care capital requirements, liquidity requirements, providers’ phone and server systems. support from a central bank and a way to HEALTH CARE INDUSTRY SafeMode keeps all payment information, compensate depositors if the stablecoin fails. including the dual-tone multifrequency By offering people an alternative to sounds of patients entering card numbers commercial bank money, new forms of digital Hospital through a dialpad, off the company networks money could affect the cost and availability of and moves it into RevSpring’s network. borrowing from banks, the Bank of England system The process provides more security for the argues. “All else equal, that could make it customer service representatives taking difficult for monetary policy to ease financial these types of calls, including those working conditions,” the central bank’s discussion upgrades from home. paper says, adding a counter argument that “The majority of the SafeMode application new forms of digital money could increase payments is going to reside within a call center setting, the resilience of payments. as we want to get to the level of completely The most mainstream stablecoin, the eliminating PCI scope from their network,” Facebook-affiliated Diem, has not yet tech to said Casey Williams, senior vice president launched, though its model has been of engagement and payment applications at adjusted several times to address regulatory improve Livonia, Michigan-based RevSpring. concerns, evolving from a stablecoin backed Even when a patient is navigating the by a revolving basket of traditional currencies integrated voice response choices on the to a one-to-one model. Most recently Diem collection, phone, SafeMode operates “like a firewall” in moved its headquarters from Sweden to the moving the payment data into the RevSpring U.S. and selected Silvergate Bank as its issuer. security network and its PCI compliance, Williams Other stablecoins, such as Circle’s USDC, said. SafeMode also covers the IVR options have expanded quickly. USDC has handled By David Heun in which a patient is encouraged via text to more than $500 billion in payments over the June 07, 2021 pay through , Google Pay or other past 12 months, and has expanded to about Hospital data is as confusing as it is secure options or through an email process. 12 billion coins in circulation. Stablecoins sensitive. An automated system for collecting A high percentage of patients, when given additionally are part of Visa and Mastercard’s payments can simplify the process while also the option to do so, will choose to make plans to support payments for digital making it more secure. a payment through self-service, Williams currencies. An additional benefit of automating noted. The Bank of England also says stablecoins payments is it improves collection efforts Visa and Mastercard have long been are developing as nations study, test and by allowing patients to settle their bills even pushing for consumers to save their credit deploy central bank digital currencies, saying when the health care provider’s call center is card information to a profile and, in turn, the prospect of stablecoins and CBDCs closed. provide the merchant with a token for future generate a “host of issues” that central Emory Healthcare of Atlanta has used or recurring payments. That way there is no banks and governments need to consider. technology from RevSpring the past three need for the consumer to reenter numbers. Interoperability between CBDCs between years to collect payment card data while also “With certain verticals, getting that first nations and with other digital and traditional keeping it out of scope from the Payment transaction to tokenize has been logistically currencies is one of the main challenges the Card Industry Data Security Standard. very difficult,” said Cliff Gray, senior analyst international CBDC pilots hope to address. “Our patients have ways to make payments with the Strawhecker Group. “In health care, The Bank of England is researching long before or after our hours of operation, older patients especially are only comfortable a potential CBDC, though the age and which has been a huge contributor to our with reading their card number over the

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 11 phone, and that is the last thing that Visa and unintentionally lock in the status quo or and formal paths to pursuing such ends. the banks want.” unnecessarily delay progress. Finally, regulators and industry must The types of calls that come into customer This is the same challenge we face in other keep their eye on the prize — in this case support centers have always been the most fields. When it comes to medical science, for a more fair and equitable financial system difficult to remove from PCI scope because example, without testing, experimentation — in order to speed the pace of progress. the card number has to be clear of the and measurement of outcomes it would be Blind adherence to legacy approaches and network, Gray said. next to impossible to advance the state of the processes should not be allowed to create a “That’s why hosted payment pages have field and thereby evolve the standard of care. maze that unnecessarily prevents the field been so successful,” he said. “Those get the The unprecedentedly swift development from advancing. consumer to input a number into a machine and approval of several COVID-19 vaccines A sense of urgency is perhaps the best that is not part of the merchant network.” showed what can be done when regulatory antidote. As we have learned over the past systems are agile enough to facilitate critical year with the development of life-saving innovations to benefit human lives. vaccines in record time, we are capable of BANKTHINK Conversely, the cost of not permitting safely innovating and helping lives in short innovation is stark. Imagine a scenario order. where COVID-19 vaccine development With respect to advancing fairness in Bankers must was blocked due to unnecessary regulatory financial services, we should pull from barriers. the above learnings and pursue the same recognize a Social costs would similarly be incurred objective of helping lives. If tested and if we do nothing to make lending more verified, advanced math-based machine inclusive and more fair, especially if it can learning tools when applied to consumer new ‘standard be done without introducing risk to the lending and fairness hold substantial financial system. For example, it is estimated promise in advancing the state of the field of care’ in fair that banks could generate up to $380 billion and with it the standard of care. It is time to in annual revenue by closing the small- improve what financial services providers business credit gap and bringing unbanked view as reasonable. lending and underbanked adults into the formal financial system. And wider access to credit Theodore “Teddy” Flo is the general counsel By Theodore Flo could boost global GDP by $3.7 trillion, and of Zest AI. June 07, 2021 engender $4.2 trillion in new deposits and The concept of “standard of care” is well $2.1 trillion in additional loans, according to known in certain professions, including the a report from McKinsey. FINANCIAL INCLUSION practice of medicine and law. It is generally With this framing, it is worth considering understood as a benchmark for accepted how we can take steps to advance the practices based on how a reasonable standard of care in fair-lending compliance. Minnesota professional would behave in a specific To start, we have to recognize that systems circumstance and given then-existing today in the consumer lending space are law allows knowledge. This definition assumes that the highly technical: They are software and standard of care evolves with a professional’s machine driven and capable of processing knowledge and capabilities. and analyzing rich datasets. For this reason, banks, CUs This same concept can help guide how we it is critical for all involved stakeholders, in financial services think about compliance including providers, innovators and to serve with core regulatory requirements, regulators to have the requisite technological including with respect to fair lending. More literacy to understand and assess new tools specifically, what is the standard of care or approaches — both benefits and new previously when it comes to avoiding disparate impact risks. on protected classes and how does that Next, regulators should leverage modern banned standard evolve based on our knowledge regulatory tools, including sandboxes, labs, and the tools we have at our disposal? safe harbors and no-action relief, in order to It should be universally agreed that permit robust testing of new models that can customers the underwriting and extension of credit help advance the state of the field. to all people, regardless of race, gender There’s a big need to collect and share By Ken McCarthy or ethnicity, through an equitable and more data industrywide about the impact of June 07, 2021 nondiscriminatory process is the ultimate artificial intelligence and machine learning A recently passed Minnesota law will objective of a fair financial system. The on financial inclusion. Regulators should allow state-chartered banks and credit challenge is to find ways to do better embrace the appetite of innovators to test unions to open checking accounts for and to ensure that our regulations don’t and demonstrate results by creating clear consumers who have had accounts forcibly

For up to date and complete coverage go to AmericanBanker.com WEDNESDAY JUNE 9, 2021 AMERICANBANKER.COM PAGE 12 closed within the past year. account, including a stigma that creates information, Bailey said. The bipartisan bill passed the state Senate difficulties in simply buying the basic goods The scanned IDs will complement use and House unanimously, and Minnesota and services that one needs in order to of Apple Pay in those instances in which Gov. Tim Walz signed it into law May 25. thrive in life. Being able to offer a second- transactions call for a check on a personal Before passage of the legislation, chance checking account would have an ID. It would also complement some facets of Minnesota statute forbade any state- incredible impact on the financial wellness Apple Card use. q chartered from opening of our members, our community and our transaction accounts for people who region.” © 2021 Arizent and American Banker. had accounts forcibly closed because of All rights reserved. dishonored checks within the previous 12 months or if the person had been convicted DIGITAL ID of a check-related criminal offense in the previous 24 months. Federally chartered financial institutions Apple to add were not barred from opening accounts for those customers. digital ID “This bill is a simple step to give thousands of Minnesotans economic opportunity and avoid predatory financial practices like storage to payday loans and check-cashing stores,” Rep. Jim Davnie, who co-authored the bill, Wallet app said in a press relese. “Opening an account at a financial institution is an important By David Heun first step to financial inclusion and building June 07, 2021 economic security.” Apple will allow some iPhone users to scan According to the Federal Deposit their driver’s license for display at airport Insurance Corp., the unbanked rate checkpoints and other use cases. in Minnesota is approximately 3%. The personal ID feature will be part of Additionally, the Prosperity Now Scorecard, iOS15, the next version of Apple’s mobile which rates household financial health, said operating system planned for the fall, Apple the overall underbanked rate in Minnesota vice president Jennifer Bailey said Monday is 9.6%, and for households of color that at the opening of Apple’s 2021 Worldwide number increases to nearly 33%. Developers Conference. “Months of work went into this bill to “Users can scan driver’s licenses or state ensure we had the best language, and I’m IDs, from those participating U.S. states, so thrilled to have Gov. Walz’s support in this your information is now in Apple Wallet,” effort,” Sen. Karin Housley, another co- Bailey said. “It is encrypted and safely stored author of the bill, said in the release. “Too in the secure element; the same hardware often, people face a bad run with their technology that makes Apple Pay private and finances, which can lead to the closure of secure.” Bailey did not say which states would their checking and banking accounts. These support storage of IDs in the Wallet app. people are then unable to open another More companies are exploring use cases checking account for a year, and are then for digital ID systems that can improve left to rely on alternatives like check-cashing identity verification for digital transactions. stores that charge higher fees.” In April, Mastercard announced a deal to buy Mara Humphrey, chief advocacy officer a digital ID startup, Ekata, for $850 million. of the Minnesota Credit Union Network, the In addition to digital ID, Apple announced state trade association that helped draft the Monday that the wallet would store digital bill, said the legislation provides state credit car keys, and apartment, home or office keys unions the opportunity to expand access to later this year. It can also be used for hotel financial services for individuals who do not room access, similar to Walt Disney World’s possess a . MagicBand. Nicholas Mathiowetz, president and The Transportation Security CEO of the $71 million-asset Northridge Administration is working with Apple to Community Credit Union in Hoyt Lakes, enable airport security checkpoints to be the said in the press release: “There are many first locations in which Apple smartphone downfalls that come with not having a bank users could engage their new digital ID

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