Future of Finance | Week in Review

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation.

1. New BlackRock Unit Gains Larry Fink a Seat at Fed’s Crisis Table

What happened: Blackrock’s Financial Markets Advisory unit has twice recently been called in by the FDIC to clean up a mess. This time, “the challenge is to find buyers for $114 billion of securities left to the U.S. government by SVB and Signature, all while not further ruffling financial markets.”

Why it’s important: BlackRock Chairman Larry Fink has positioned FMA as the S.W.A.T. of choice not because it’s lucrative but for the strategic power of “having a seat at the table when the next crisis, or perhaps the next opportunity, arises.”

What’s next: “Privately, BlackRock executives say FMA may well get more work soon. That’s particularly so if, as some policymakers have suggested, Washington ends up tightening banking regulations.” (By Silla Brush, Bloomberg.)

2. Britain’s Version of BNPL Is D.O.A. for Consumers

What happened: “Executives at Klarna and Block say that proposed U.K. buy now, pay later rules, while well-meaning, are likely to do more harm than good.” Why? Added regulation means added time spent at checkout for consumers.

Why it’s important: This “disproportionate friction” that might lead to three times the length of checkout for BNPL consumers. That’s bad for fintech newcomers, but especially so given that the new regulations may include carve outs for large retailers.

What’s next: According to one industry analyst, “‘Some firms might choose to withdraw from the U.K. market once they work through the costing. There is a risk of it being too expensive’ to operate in the U.K.” Though a final ruling probably won’t come for another year. (By Ryan Browne, CNBC)

3. Apple’s Entry to High-Yield Savings Shows Industry How It’s Done

What happened: Apple’s new high-yield savings account brought in nearly $1 billion in fresh deposits in only four days.

Why it’s important: The consumer rush to a known and trusted name puts further pressure on regional banks struggling to maintain deposits in the wake of the Silicon Valley Bank and First Republic failures.

What’s next: Expect pain for fintech startups and neobanks like LendingClub trying to compete in the high-yield space. The iPhone is the most one of the most ubiquitous objects in the world and “inertia is a powerful force in financial services, especially banking.” (By Emily Mason, Forbes)

4. Why Wasn’t There Another Bidder for First Republic?

What happened: The FDIC wanted speed post-Silicon Valley Bank. “The U.S. government chose efficiency over ideology by allowing JPMorgan, the largest American lender, to purchase First Republic Bank for $10.6 billion, bringing a quick and clean resolution for the ailing California lender.”

Why it’s important: “I’ve written before during this slow-moving crisis that I thought Washington’s response was too slow and too politically tinged, but this is a surprisingly good deal for the government and, by extension, taxpayers.” Even if one known interested party, Morgan Stanley, stayed on the sidelines.

What’s next: “Dimon may have lasting regrets about his 2008 government-brokered purchases of Bear Stearns and WaMu, but they cemented JPMorgan as the nation’s biggest bank, and the years that followed cemented its reputation as the best-managed. Banking is a scale business, and JPMorgan just bulked up.” (By Liz Hoffman, Semafor)

5. Fine-Tuning Deposit Insurance. Finally.

What happened: In the wake of multiple bank runs that showed large depositors were at greater risk than previously imagined, the FDIC is proposing “narrow” changes to insurance that could reduce future risks.

Why it’s important: “The FDIC said a targeted expansion of federal insurance for business accounts would be analogous to a financial crisis-era program that temporarily provided unlimited federal guarantees to noninterest bearing deposit accounts.”

What’s next: Possibly, a temporary reprieve from the panic that’s engulfed smaller regional banks. “Proponents, including a trade group for midsize banks, have said expanding deposit insurance coverage would reassure bank customers and protect smaller banks from losing deposits to larger institutions.” (By Andrew Ackermann, The Wall Street Journal)