Wall Street Journal
Online payments processing startup Dwolla has been slammed with a $100,000 fine and enforcement action from the Consumer Financial Protection Bureau for misrepresenting security practices related to customer data. The CFPB alleges Dwolla failed to employ sufficient measures to protect data obtainable by unauthorized users while claiming to customers it was "securely encrypted and stored," though it did not allege any actual breach of data. The CFPB's claim focuses on practices dating back to 2011-2012. As of May 2015, Dwolla boasts more than 650,000 customer accounts and as much as $5 million in daily transactions. Dwolla has not admitted or denied any allegations.
As merger and acquisition volume is nearing record levels, banks are profiting from advisory fees. But lately, companies' board members have been anxious over M&A-related conflicts of interest and the financial advice they receive from their bankers, whose companies could be in the midst of a deal at odds with that advice. For example, pharmaceutical company Perrigo recently dropped its JPMorgan Chase advisor in its battle against the Mylan takeover. JPM was simultaneously advising Allergan on its sale of Teva, thereby ending Teva's bid for Mylan and leaving Mylan to focus on its Perrigo pursuit. There have been about two dozen banker-targeted lawsuits claiming M&A-related conflicts like this one. Companies have been sending an increasing amount of work to boutique investment banks who may not have the network of the JPMs but also may not have the conflicts of interest. Larger banks have been more selective about the assignments they take and come under more scrutiny when hiring bankers.
New York Times
Bank of America executives have eyed the auto lending business as one with a lot of opportunity for growth, provided borrowers have good credit. Now the bank has been on a loan officer and sales hiring spree in recent months and is amping up its auto lending activity, despite a seeming weakening of consumer credit and regulators' warning against subprime auto loans. Bank analysts and competitors say B of A's moves make little sense at this point as sales could soon peak and credit in auto looks weak. About $1.1 billion of auto loans were classified as uncollectible in the fourth quarter of 2015, a 15% increase on a year-over-year basis and a 39% increase since the same quarter in 2011.
Royal Bank of Scotland is experimenting with an artificial intelligence system for a customer service platform that could be available as soon as this year. A Siri-like robo-adviser named Luvo aims to free up staff and allow them to handle more complex customer inquiries, while Luvo can process and respond to more basic banking, straightforward inquiries more quickly. It is programmed to learn from its mistakes, and sense and exude personality. RBS will initially roll it out as a text-based system – although it isn't ruling out speech for the future – for staff to help service customers who, for example, have lost a bank card or need to unlock their PIN.
The Charlotte Observer:Bank of America has provided 59% of the total $7 billion in consumer relief for those harmed by the financial crisis. It has until August 2018 to provide the full amount of relief, as part of the $16.65 billion settlement, the largest between a company and the government. B of A had admitted to participating in faulty mortgage-backed securities practices with Countrywide Financial and Merrill Lynch, both of which it bought. The bank agreed to pay the other $9.65 billion in cash payments to the government and six states, as part of the deal. It can earn credit for other forms of relief like modifying mortgages to make them more affordable, giving loans to low- and moderate-income borrowers and donating money to housing-counseling and legal-assistance groups.