Credit card lending in the United States has been enjoying life in sunny uplands of late, buoyed by historically low unemployment numbers and popular enthusiasm for products such as JPMorgan's Sapphire Reserve credit card, which continues to enthral rewards comparison gurus. But with growing charge-off rates in this market, issuers are now beginning to tighten standards, according to the Fed's latest quarterly survey of leading loan officers, which also reveals a slight falling off in demand for credit cards. It is interesting therefore that American Express, continuing its dramatic brand evolution in recent years, has relaunched the Blue Cash Preferred card, now with cashbacks for such contemporary consumer favourites as streaming media subscriptions and ride-hailing services. "The spending threshold to get the bonus is remarkably low," said one analyst quoted by MarketWatch. "It's not the biggest sign-up bonus that's out there, but it's a solid return for a relatively low amount of spending."
Staying in the US, an important battle continues to be played out in the courts, with a district court ruling that a state financial regulator can indeed pursue its case to block a federal plan to grant fintechs banking charters. At issue is whether American financial technology firms should be regulated primarily at the federal or the state level. With fifty states in the union, it would be clearly easier for the new breed to operate and scale up in line with nationwide regulations from the Office of the Comptroller of the Currency (OCC), an independent bureau of the US Treasury. Long before the current administration in Washington was even a gleam in the electorate's eye, the OCC had floated the prospect of a Fintech Charter and has since pursued authority to bring it into being. That was enough to set state financial regulators on the legal warpath, arguing that a one-size-fits-all solution would be financially risky and bad for consumers. Last August, the OCC began accepting applications from fintechs for charters, with some observers seeing it as an invitation to the likes of Amazon to establish their own banks. "The regulatory situation is much more complicated for fintechs in the US than it is in Europe, where a licence in one country can be 'passported' across the entire European Economic Area to reach over half a billion people, " commented David Hickey, head of research at Verisk Financial Lafferty Research. "Needing to apply for separate licences in each state is expensive and onerous, particularly for smaller players who don't command the resources of the internet giants."
A year is a long time when it comes to digital transformation and so Singapore's DBS, which began the process in earnest over five years ago, can afford to be somewhat sanguine as the city-state's central bank considers whether to grant licences to digital-only banks that have no bricks-and-mortar parent. As chief executive Piyush Gupta mentioned in a Bloomberg Television interview this week, "if you've already been transforming yourself then it is not very different from the models that the traditional banks use....The real challenge is if the regulators create an unlevel playing field and they let the new bank licensees come in and do banking on different terms." In other words, the Basel-driven capital and liquidity requirements must apply to all players. DBS' ongoing digitalisation has been multi-faceted, involving the retraining of over a thousand staff and the hiring of anthropologists and psychologists, among others, to make the most of data. Before taking over DBS in 2009, Mr Gupta had briefly interrupted a quarter-century's tenure at Citi to create an online portal called go4i.com in 2001. Perhaps because of this first-hand experience of internet start-ups, DBS' investments in and acquisitions of fintechs have been few and conservative: most notable might be conversational AI platform Kasisto, whose technology was put to use in the bank's mobile offering: digibank.
To end, links to some other stories of interest this week...