Weekly Briefing No. 179 | The End of Bank Fees, Facebook Gets Into Crypto, and More

jordan-311290-unsplash (1).jpg

Welcome to The FR, where we’re carefully plotting our IPO.

In this edition:

  • The End of Bank Fees?

  • Crypto’s Facebook Bump

  • Tech for the UHNW Client

  • The Return of Big Bank Mergers

  • The Downside of a Cashless Society

The End of Bank Fees?

The rise of fintechs over the last decade-plus has changed the way many traditional financial institutions do business in order to keep up. When they began offering high-yield savings accounts, banks had to start doing the same in order to stem the tide of deposits flowing outbound. The explosion in popularity of robo-advisers caused traditional brokerage firms to begin offering digital, no-fee accounts.

Could checking and savings account fees be next on the chopping block? Banks have long relied on these — such as overdraft fees or minimum balance fees — as a significant source of revenue.

Crypto’s Facebook Bump

Can a rising tide (from Facebook) lift all boats in the crypto world? That’s what some would think, as Bitcoin hitting the $9,000 mark this week for the first time in a year coincided with news that Facebook will launch its new digital currency called Libra. “Experts say the involvement of large companies like Facebook and AT&T in the crypto space is helping to lift sentiment, as it gives a degree of legitimacy to an industry long plagued by talk of illegal activity,” reports CNBC. However, while this could be very well be true in the short term, we all know how volatile the crypto market is; it wouldn’t surprise us if Bitcoin was worth $1,000 or $20,000 at the end of the year.

Tech for the Ultra-High-Net-Worth Client

The prevailing sentiment for years has been that tech tools in wealth management are primarily designed for the mass affluent. These are clients who don’t need to meet with an adviser regularly and can use automated digital services for much of their needs. But for high-net-worth clients, the human touch was still needed, the thinking went.

The Return of Big Bank Mergers

The 80s and 90s were marked by major M&A deals in the banking world. Current behemoths such as Bank of America, JPMorgan Chase and Wells Fargo were largely borne out of acquisitions from that time period. Thinking about it makes us wistful for bank brands long gone: Manufacturer’s Hanover, Bank One, Chemical Bank.

Could the era of bigger bank deals be coming back? In addition to the massive BB&T-SunTrust deal, valued at $28.1 billion, American Banker reports that three other bank deals have been consummated already this year with values of at least $2 billion. Bank M&A dropped off severely after the financial crisis, but it could be back, and in a big way.

The Downside of a Cashless Society

We have written in the past about the pitfalls of creating a so-called “cashless society,” among them the risk that it would disproportionately affect the elderly and disabled. Well here’s another: people will have no way to pay for goods and services when electronic systems go down. Such was the case during Target’s much-publicized point-of-sale outage last weekend. Target told its customers they could instead pay in cash or (gasp) by check while the outage was ongoing, only to find many did not carry either on their persons. Just another reason we should not go full bore on eliminating cash just yet.

Quote of the Week

“As the world becomes a more digital place, we cannot forget about the human connection.”

–Adam Neumann