The Power of Partnership: Conversations about the competition between banks and tech startups tend to get a little heated, but this week on BankThink two ambassadors from the fintech world stepped forward to call for a truce. Jordan Lampe of real-time payments platform Dwolla discussed how banks can overcome common hurdles to collaboration, from cultural differences to compliance issues. And René Lacerte, head of paperless bill payment service Bill.com, predicted a coming boom in marriages between startups and banks. "Traditional banks can bring much needed scale, resources and institutional clout to the table for young fintech companies," he writes, while banks can benefit from startups' cutting-edge technology. Readers generally approved of the message, though that didn't prevent them from choosing sides. "Banks only exist because of their entrenched legacy and regulatory moat," wrote reader Edrizio. "When it comes to the actual services that banks provide microlending, P2P, investing, bill pay startups provide services that are 10 times better." Commenter Richard Duncan put forward a darker vision of the future of financial services: "My experience listening to startup developers and investors, not to mention over 30 years in the industry/government, indicates that the outcome will eventually be that the innovators slow down, not that the banks speed up."
Out in the Open: Requiring brokers to disclose conflicts of interest is a good idea, according to Brayden McCarthy, head of policy and advocacy at small-business-loan marketplace Fundera. But he cautions that merely letting customers know a conflict exists is not enough. He recommends instating standardized disclosure forms that let clients compare brokers' products by the compensation they receive, along with a requirement that all brokers abide by a fiduciary standard.
Also on the blog: Community banks should consider narrowing down their target customer segments rather than trying to be all things to all people, according to CCG Catalyst head Paul Schaus. That is because big banks are already catering to a broad swath of customers, and they have a lot more resources to spend in their efforts.
Better Markets head Dennis Kelleher rose to the defense of the Financial Stability Oversight Council for designating MetLife as a systemically important financial institution. "Preventing the next financial crash and saving tens of millions of Americans their jobs, homes and savings is well worth some additional regulatory costs" for risky companies, he writes.
Mortgage lenders have to be even more rigorous about evaluating the effect of their business practices in the wake of the Supreme Court's recent ruling upholding the application of the disparate impact theory under the Fair Housing Act, according to attorney Ari Karen.
Basel III and anti-money-laundering regulations may inadvertently stifle trade finance unless the industry does a better job of communicating with regulators, according to Daniel Schmand, chairman of the international Chamber of Commerce Banking Commission.
This week, we learned that a bad day for the New York Stock Exchange is a good day for Twitter. Check out American Banker's round-up of industry insiders weighing in on social media about the risks inherent in increasingly electronic exchanges.
As Elizabeth Warren stepped up calls to reinstate the Glass-Steagall Act, her fellow Democrat Nancy Pelosi sought to clarify that the Massachusetts senator does not speak for the rest of the party.