Top banking news this month: October 2022

October 31, 2022 4:12 PM

In this month's roundup of American Banker's favorite stories: JPMorgan Chase moves third parties away from screen scraping, Wells Fargo launches its new virtual assistant, bank CEOs predict a full return to office within the next three years and more.

Click here to read last month's roundup of banking industry news.

The Most Powerful Women in Banking 2022

Article by Mary Ellen Egan

This year marks the 20th anniversary of the Most Powerful Women in Banking. The inaugural list debuted in what was then called US Banker. No. 1 on the list was Sallie Krawcheck, who was the CEO of Smith Barney at the time. Among the women on the cover that year were Julia Gouw, currently the board chair at Piermont Bank, and Ranjana Clark, who is the head of global transaction banking at MUFG. This is Clark's 15th appearance on the list.

Other returnees to the list this year include Jill Castilla, president, CEO and vice chair of Citizens Edmond Bank, and Nandita Bakhshi, president and CEO of Bank of the West. Dorothy Savarese, another returning honoree, stepped down as president and CEO of Cape Cod Five Cents Savings Bank this year and became its executive chair.

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Signage is displayed outside a JPMorgan Chase bank branch in Chicago.

JPMorgan Chase says it has fully eliminated screen scraping

Article by Miriam Cross

JPMorgan Chase has reached a milestone five years in the making — the bank says it is now routing all inquiries from third-party apps and services to access customer data through its secure application programming interface instead of allowing these services to collect data through screen scraping.

The New York bank made this announcement on Oct. 6.

"It's a big win for our customers because they get greater control over their data and more visibility around which applications will use the data and which accounts they will be sharing with those applications," Paul LaRusso, head of data aggregation at Chase, said in an interview.

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"I'm not necessarily trying to figure out how to leapfrog others as much as I'm trying to figure out, how do we actually help our own clients," says Michelle Moore, head of digital at Wells Fargo, on left. "We've got 60 million of them. And that's where my focus is." Her team is working with a group of engineers at Google headed by Yolande Piazza, vice president of financial services.

How Wells Fargo is Google-izing customer interactions

Article by Penny Crosman

In a demo that was controversial at the time, in 2018, Google CEO Sundar Pichai demonstrated Google Assistant making a hair salon appointment on behalf of a customer and trying to make a restaurant reservation on behalf of another.

Critics thought the demo was creepy because of how real it seemed — the salon and restaurant reservation takers thought they were talking to human beings, who used filler sounds like "um" to sound more natural.

Wells Fargo is now harnessing this technology — not the creepy part but the ability to understand human interactions — to power its virtual assistant, Fargo. On Oct. 24, the bank announced that it is partnering with Google to give consumers the familiar Google Assistant experience in Fargo through Google Cloud's Dialogflow. The bank has been beta-testing Fargo with about 100 employees and hopes to roll it out to customers in the second quarter of 2023.

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Increase interest rates. Business woman pulling up percentage icon. finance and investment

Adobe Stock

Bankers betting interest rates will peak in first half of 2023

In the eyes of bankers, the U.S. is about three to nine months from seeing its highest interest rates in more than 15 years and perhaps even closer to an economic slowdown.

Almost two-thirds of banking executives think the federal funds rate will peak in the first half of 2023, according to an IntraFi Network survey of more than 450 bank executives released Oct. 18. Close to 60% of banking leaders expressed concern that the Federal Reserve will raise rates too quickly in its bid to tame inflation.

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Andrew Harrer/Bloomberg

7 banks and other firms changing payroll to battle inflation

Article by John Adams

More demographic groups are demanding access to salaries in something other than a traditional two-week pay cycle, leading banks and payment firms to get more aggressive in offering alternative ways to handle payrolls.

"By providing their employees access to the money they have already earned, employees have more short-term liquidity to avoid overdrafts, late fees, and expensive payday loans," said Ram Palaniappan, CEO of Earnin, a firm that offers an earned wage access (EWA) service, which allows employers to offer a portion of employees' earnings before a regularly scheduled payday.

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A Wells Fargo Bank Branch Ahead Of Earnings Figures

David Paul Morris/Bloomberg

Wells Fargo's latest financial blow shows its regulatory woes are hard to forecast

Article by Polo Rocha

If Wells Fargo were a regular bank — not one that intermittently takes large hits tied to regulatory troubles — its third-quarter earnings report would have ticked many boxes.

The San Francisco-based megabank grew its loans, collected more interest and made progress in cutting expenses, even as its loan book remained healthy.

But the regulatory woes that have long plagued the company once again clouded its earnings. Wells recorded $2.2 billion in operating losses — the line item where it counts expenses from lawsuits, regulatory penalties and customer restitution. And CEO Charlie Scharf said it's "highly likely" that the bank may record more expenses in future quarters that "could be significant."

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Camp Street side of John Minor Wisdom United States Court of App

The CFPB has roughly two weeks to seek a review by the full U.S. Court of Appeals for the 5th Circuit of a three-judge panel's decision to strike down the CFPB's payday lending rule. Alternatively, the CFPB could ask the Supreme Court for a review, according to experts.

Adobe Stock

All of CFPB's past actions threatened by appeals court decision

Article by Kate Berry

An appeals court decision that invalidated the Consumer Financial Protection Bureau's payday lending rule has far broader implications, potentially opening all of the agency's past rules and other actions to legal challenges, say regulatory and constitutional lawyers.

On Oct. 19, a panel of three judges on the U.S. Court of Appeals for the 5th Circuit vacated the CFPB's payday lending rule that had been challenged by two Texas trade associations. The three judges, all appointed by then-President Donald Trump, ruled that the CFPB's funding source — the Federal Reserve's operating budget and not congressional appropriations — violates the Constitution's separation of powers because it gives the executive branch too much, and the legislative branch too little, control of a federal agency.

The panel's decision is not binding, and the CFPB has roughly two weeks to seek a review of the case by the full appeals court. If that appeal is accepted, the three-judge panel's decision would be automatically vacated until the entire court hears the case, Community Financial Services Association of America v. CFPB. Alternatively, the CFPB could ask the Supreme Court for a review, lawyers said.

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San Francisco Workers Slow To Return To Office

David Paul Morris/Bloomberg

Bank CEOs expect returning to the office will become the norm

Article by Orla McCaffrey

Bank leaders aren't sure what the next three years will look like, but many are certain about where their companies' work will happen: the office.

Almost 70% of U.S. bank CEOs surveyed by KPMG said they envision fully in-office working environments within the next three years. That is close to double the average of other white-collar industries. Just 6% of bank executives predicted remote-only work environments.

The predictions highlight the degree to which bank leaders see their work as a relationship business and provide a glimpse of how executives think the industry's workforce will operate in the coming years.

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David Marcus, PayPal's former president, and PayPal co-founder and Tesla CEO Elon Musk were among those who criticized the payment company's plans to fine users for using the company's services to spread "disinformation."

PayPal made a big upgrade to its U.S. tech. Did anybody notice?

Article by John Adams

PayPal finally brought over iZettle's technology to the U.S. — an important milestone in its integration of the European fintech, a Square-like merchant technology company that PayPal acquired in 2019.

But that's not what's making headlines.

The San Jose payments company is facing severe backlash on social media — some of which came from its past executives — after updating its Acceptable Use Policy to threaten fines of up to $2,500 for merchants or consumers who use the payment company's services to spread misinformation, effective November 3. The update was pulled this weekend.

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Jerome Powell, chairman of the Federal Reserve, removes his glasses during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington on Sept 24, 2020.

Jerome Powell, chairman of the U.S. Federal Reserve, has been resolute in his efforts to tame inflation by raising interest rates and reducing the Fed's balance sheet. But important technical liquidity and supervisory questions will need to be resolved for that effort to be successful.

Bloomberg News

The hidden dangers in the Fed's balance-sheet reduction

Article by Kyle Campbell

The Federal Reserve's balance sheet runoff is picking up steam after its monthly cap on unreplaced maturities doubled to $95 billion last month. Earlier this month, it shed $37 billion of assets.

As the central bank ramps up its effort to reduce its holdings — currently totalling more than $8.7 trillion — to a more manageable level, it gives rise to questions about how much runoff the banking system will tolerate and how potential regulatory changes might pave the wave to a smoother balance sheet reduction than in the past.

The Fed has been steadfast in its commitment to tightening monetary policy until inflation abates, but it remains unclear if it can avoid a repeat of the September 2019 tightening cycle, when a scarcity of reserves forced the Fed to expand its balance sheet again. The threat is punctuated by last month's U.K. government debt crisis that forced the Bank of England to intervene in the bond market to avoid a financial catastrophe.

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