Everyone wants to be a bank

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Hello and welcome to Protocol | Fintech! This Friday: fintechs with banking ambitions, Hippo joins the SPAC bandwagon and Splitit CEO on the importance of staying focused.
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And now, Square also has a bank. (And, yes, Tidal; more on that here.) The company finally got a charter approved for Square Financial Services, which will be "the primary provider of financing for Square sellers across the U.S."
It highlights the big trend of fintechs applying for or buying bank charters that allow them to directly offer the many services that banks do.
The stream of banking wannabes is "almost becoming a flood," Peter Renton, co-founder and chairman of LendIt, the financing and digital banking events company, said late last year.
Getting a banking charter can be long and arduous. But for a growing number of fintech companies, the time and hassle are apparently worth it.
Varo blazed an early trail for the fintech-turns-bank hopefuls. Last year, the challenger bank became the first consumer fintech company to receive a national bank charter from the Office of the Comptroller of the Currency.
Charters are of course just one approach, and PayPal appears to be trying something different. The company says it wants to build a "super app" providing a range of payments, shopping and financial services through its app.
But the view on banks and charters seems to be solidifying: Just like Renton said last year, the future of banking does increasingly look like fintech, and vice versa.
The future is positively digital. Ready? Consumers, investors and shareholders are savvier than ever. Everyone needs to create more engaging experiences that keep pace with today's new expectations. See how you can stay ahead with next-gen technologies that deliver on what matters most. We can help.
Ah yes, that Tidal deal. Jack Dorsey made big moves this week: After Square announced that it now has a bank, the company then said it was taking a majority stake in Tidal, the music streaming service backed by Jay-Z, for $297 million. Here's our look at what that all means.
Plaid is riding some choppy water and its COO Eric Sager — a keen surfer — is helping lead the fintech powerhouse through them. We spoke to him about it all, including a heated debate over data access in financial services.
What was your biggest blunder and what did you learn from it?
There have been many, but all turned out to be great learning examples. The one that stands out most was earlier in my career, I tried to prove that an off-strategy opportunity was worth pursuing, even after being asked not to do so. Six months of work later, it didn't matter if it was a good idea or [had] OK results, the fact that it was off-strategy slowed us down and disrupted our team, impacting more people. I learned that focus is critical and to win as a team, not as an individual, in narrow lanes first before expanding elsewhere.
What are you most excited about in fintech?
"Buy now, pay later" — Splitit's backyard — is clearly one of the hottest and most exciting spaces now. Allowing retailers to drive higher conversion by empowering consumers to pay over time is changing payments. Cryptocurrencies and blockchain are reaching a tipping point; the potential across commerce, B2B, remittances and more make this another of fintech's hottest spaces.
What fintech trend/direction are you most worried about?
I'm most concerned about the growing trends of products and companies that claim to be in the consumers' interest, but in reality make 30% to 70% of their revenue from consumers being overstretched financially. The rhetoric is not matching the business model.
What in fintech do you think needs to be fixed?
Consumer data is being monetized and consumers aren't participating in that monetization. The fix will be when data emerges as a form of an asset that consumers themselves are able to monetize. There are some emerging examples; however, it will be an uphill battle to democratize consumers' ability to monetize their own data.
The future is positively digital. Ready? Consumers, investors and shareholders are savvier than ever. Everyone needs to create more engaging experiences that keep pace with today's new expectations. See how you can stay ahead with next-gen technologies that deliver on what matters most. We can help.
Thanks for reading — see you Tuesday!
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