Essential Fintech News - January 2019

1. Big banks miss earnings

Wells Fargo, Citigroup, JP Morgan, and American Express all reported quarterly earnings in January – and it didn’t look pretty. On the bright side, Bank of America reported terrific numbers – which CEO Brian Moynihan attributed to “disciplined expense management” coupled with “solid asset quality and loan deposit growth” in the BofA earnings press release.

As a whole, the outlook on revenues are more bearish than previous forecasts. 

U.S. banks have enjoyed their two most profitable years in the history of banking – driven mainly by a great economy (lots of loans!) and generous tax breaks. (A recent infographic created by MX shows, consumer borrowing / debt has reached record levels.) The concern now is that as interest rates have risen, it is more expensive for consumers and business owners to borrow. Thus, loans slow down. Areas that may become particularly slow include auto loans, home loans and business borrowing.

Bottom line: As years of plenty give way to pressure to hit numbers, using data to help fuel sluggish loan volume tends to become a higher priority.

By acquiring First Data for $22 billion, Fiserv combines two of the biggest and most established players in the fintech arena. Fiserv and First Data say that combining will allow them to offer “a range of payments and financial services, including account processing and digital banking solutions; card issuer processing and network services,” according to the Fiserv press release.

As the Wall Street Journal put it, “The deal underscores the growing threat of upstart financial-technology firms to a lucrative but obscure business long controlled by more mature companies. Fiserv and First Data provide a range of technology services to banks, merchants and other companies involved in the business of moving money.”

 3. Plaid acquires Quovo