Community

What exactly does "Capital Utilization" mean? Is it the amount I charge to my credit card during a month (a "flow" metric) or the cumulative outstanding I carry on my credit card at the end of a month (a "stock" metric)?

After reading the entire post, I'm leaning towards the latter but, considering that it's the central theme of your post, wish you'd given a working definition of this term right at the beginning of your post. 

Also, I'm wondering if the correct term for what you mean is "Credit Utilization". When I Googled for "Capital Utilization for Credit Card", your post is the only exact match. All other entries are for "Credit Utilization". 

Curious to know how Plaid gets away with accessing Bank Accounts? You're not alone. Click here for more.

tl;dr:

• It is phishing
• Banks tell you to never give NetBanking creds to 3rd party
• But when that 3rd party is Plaid, banks invest in it! 

#GoFigure!

The product vision of Fincumbents is aligned to the different zeitgeist of Universal Banking. Even if they had a cloud native platform, I seriously doubt if they'd fit the founding philosophy of Fintechs, which is unbundling of banking i.e. the exact opposite of universal banking.

Today there are new-age BaaS platforms like Amount etc.that resonate with the unbundling product vision of Fintechs but, when many Neobanks were founded 5+ years ago, I doubt if they had a choice but to build their technology inhouse.

Fintechs are just learning that, whether you're a 100 year old Bank or a 5 year old Neobank, age has its advantages and disadvantages. An old Neobank has as much chance of being upended by a new Neobank as a traditional Bank, by the old Neobank - and, for more or less, the same headline reasons. 

LOL. Interesting post. I don't recall the last time I've seen this topic covered in the blogosphere.  

That said, it reminds me of this book I read where a n00b investment banker is accosted by a druglord and urged to accept a deposit of a few million dollars in cash. Our protagonist is shocked and rejects the proposition outright - after all he has just landed a plum job in a global investment bank in Zurich and doesn't fancy endangering his career prospects by beginning his stint with such a shady deal. Somehow the druglord forces him to accept the proverbial suitcase full of dollar bills. He takes the first flight out and reaches his office in Bahnhofstrasse the next day. A few hours later, he musters up enough courage to fess up his misdeed to his boss.  

His boss simply tells him, "Next time we'll send you a chartered jet".

Moral of Story: Banks probably already use all the systems and scenarios you've advocated in order to identify red flags - just not for the purpose for which you've done so:)

Well, 10 years ago, that's how some PFMs worked. But that posed too much friction and PFMs like KUBLAX et al who followed that approach died. And,  OTOH, PFMs like Mint and aggregators like Plaid that used phishing and screen scraping brazely flourished. 

More at my 2011 comment here.

Gathering online banking creds via phishing backed by user consent is one thing but how the heck does Plaid do so without user consent?

On a side note, this is yet another gentle reminder that personal data is worth peanuts for the guy to whom it belongs and translates to big bucks only in the hands of the firm that uses it for targeted advertising and other pursuits.

Music has evolved over the years in at least two ways that I can fathom: (1) I can buy a single song instead of entire album (2) I can download / stream a song on multiple platforms like Spotify, iTunes, Amazon Music, etc.

But, when it comes to adjacent products from the same Media industry, (1) It's not easy / possible to buy a single episode of a TV show or news article (2) A given TV show is typically available only against a single OTT subscription like Netflix, Disney+, Prime Video, etc.- not all. 

Before trying to exhort an entirely different industry like Banking / Wealth Management to evolve like Music, I'd ponder over why the evolution in Music has not even been replicated by adjacent products like TV Shows and News Articles that belong to the same Media industry.

Tectonic shift, customer centric, ESG ... HSBC is making all the right noises but why do I think this new fintech investment arm sounds exactly like the catch-all "Investment Banking SBU" I'd covered in BNPL Ain't Killing Banks. It's Making Them Rich that goes laughing all the way to the bank despite Fintechs eating the same bank's Retail Banking or Business Banking SBU's lunch? 

"Many banks invest in Fintechs, either directly or via VC funds that invest in Fintechs. Due to frothy valuations enjoyed by Fintechs, VC funds deliver 15-20% returns to their Limited Partners a/k/a Investment Banking divisions of banks. Therefore, whatever interest and fee incomes that are lost to BNPLs by the Retail Banking SBU of a bank are more than made up by the MOIC (Multiple On Invested Capital) earned by the Investment Banking SBU of the same bank."

When Chime, Revolut, NuBank and other loss-making Neobanks are enjoying such frothy valuations, it's a shame to hear that Monzo is experiencing such existential threats. 

TY @GabrielOnyango for the clarification but can you say for sure that Klarna uses illlion data outside of Australia?

As you can see from this screenshot, when I tried to register and get a free credit report, illion insisted on Proof of ID and Address in Australia.

This is not the first time a random new kid on the block is claiming that an incumbent 800 lb chimpanzee is inferior and that it will kill it, yada yada yada. Not saying Flinks can't disrupt / make a dent on Plaid but it's highly unlikely to happen via superior data quality. From what I know, data quality does not matter as much in the present days of credit decisioning via AI / ML compared to Rules as in the past.