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When it comes to personal and busi-
ness finances, banks have several in-
When it comes to dealing with personal and herent advantages over fintechs striv-
business finances, banks have several inherent ing to challenge the status quo: scale,
established trust and a favorable reg-
advantages over fintechs out to challenge ulatory environment. Bank charters
the status quo: scale, established trust and a are not easy to obtain – there are sub-
stantial regulatory hurdles, including
favorable regulatory environment. strict capitalization requirements.

That could change now that the Office
a 'build/buy/partner' evaluation to decide how we can get to market most of the Comptroller of the Currency,
efficiently," Jennifer Roberts, head of Chase Pay and digital products at JP the U.S. Treasury Department agency
Morgan Chase, stated regarding the CurrentC technology purchase. "This will that regulates nationally chartered
help us get to market faster." banks, is accepting applications from
fintechs seeking "special purpose"
Chase has been a major backer of fintech companies. For example, it invested charters. I suspect this will take time
in LevelUp, the mobile ordering, payment and loyalty app for restaurants and to catch on, as many fintechs, begun
their customers recently acquired by Grubhub Inc. And it's been collaborating on shoestring budgets, likely lack
with numerous fintechs, including OnDeck, an online lender providing small- the capital needed to secure bank
dollar loans to businesses. "The combination of Chase's relationships and charters.
lending experience and OnDeck's technology platform offers a game-changing Even PayPal is partnering
credit product," the bank noted.
Of course, there are exceptions to
most every rule, and in this case it
may be PayPal. But I believe PayPal
is less a challenge to the banking
industry's payments franchise than
it is an intermediator. It uses existing
rails (the card networks and the
ACH) to move value exchanges,
while providing a layer of protection
for weary consumers. I use PayPal
for online purchases, for example, in
an effort to keep my credit and debit
card numbers off the web.

PayPal hasn't been going it alone,
either. Two years ago, the firm entered
into a strategic partnership with
Visa in the United States, and the
partnership has since been expanded
to include the Canadian market. "The
partnership puts PayPal and Visa
on a new path, with the companies
working more collaboratively to
accelerate the adoption of safe, reliable
and convenient digital payments for
consumers and merchants," the two
said in a joint statement.

Patti Murphy is Senior Editor of The Green
Sheet and President of ProScribes Inc. Follow
her on Twitter at @GS_PayMaven or email her
at patti@greensheet.com.

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