How could technology enable sustainable banking, ESG is driving a new political divide, and are neobanks still considered disruptors? – Tearsheet

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Are neobanks still considered disruptive?

Unencumbered by physical principles and armed with sleek UX, next-gen technology and VC-backed checks, neobanks were seen as disruptors of traditional financial institutions. But what seemed like a no-brainer a few years ago is not so obvious now.

Given the second-quarter financial results of some publicly listed neobanks in the U.S., a slew of bad press and rumors that Marcus — Goldman Sachs’ digital bank — is operating at a whopping $4 billion loss, the neo-glitz of challenger banks is fading. It seems we are witnessing the cautionary tale of the tortoise and the hare. And the big question that remains is whether they can make it through the coming recession, let alone disrupt incumbents.

An interview with seasoned banking and fintech expert Darryl Knopp, senior director at FICO, put a few things into perspective.

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The Green Finance Podcast Ep. 8: How technology can enable sustainable banking with Kaliopi Ciotti, Chief ESG Officer at Temenos

In finance, the sustainability agenda is now abbreviated to three letters – ESG – stands for environmental, social and governance factors that can be factored into business decisions.

But the growing popularity of ESG investing in a deregulated market has also attracted quite a few bad apples, leaving investors overwhelmed with a growing number of options, many of which may not even be as “green” as their label suggests.

There is a growing demand for services that help banks and financial institutions distinguish between all these new labels that have grown in popularity almost overnight. And the supply side is responding – Temenos, one of the world’s largest providers of banking infrastructure, has launched an ESG investment tool as a service for banks.

In Episode 8 of the Green Finance Podcast, host Julia Ciutina explores this topic with Temenos’ Chief ESG Officer Kaliopi Ciotti to hear more about the company’s approach.

Listen / read more

The final briefing

Green finance briefing: ESG sparks new political divide

In the US, the issue of ESG has drawn political battles between Democrats and Republicans. Those three letters, an acronym unknown to the general public until a long time ago, are now at the center of a new political divide.

Those on the left believe that ESG is not really about sustainability, but about creating corporate value. Meanwhile, the right sees the ESG movement as investors trying to push a social agenda that harms the profitability of companies.

Read more (exclusively for Outlier members)

Just look at the charts

1. Digital banking is a losing business…unless they expand their product offerings

Source: David Jimenez Meirelles

2. Over 60% of Americans are concerned about their savings

source: Deloitte

Today’s stories

Affirm increases the APY for savings accounts
Affirm announced that its savings accounts now offer an annual percentage rate of return of 1.5%, noting that this is 11.5 times the national average. Affirm’s move follows other online banking providers increasing the APYs they offer on savings accounts. (PYMNTS)

Alloy is banking on fraud prevention to get a new $1.55 billion valuation
Identity verification fintech Alloy has raised $52 million at a $1.55 billion valuation, 11 months after raising $100 million at a $1.35 billion valuation. The fact that the startup was able to raise this amount of capital in such a challenging fundraising environment is impressive, but the fact that it also raised its valuation is also remarkable. (TechCrunch)

Digital Asset reported a solid performance in Q2’22
Blockchain firm Digital Asset announced another solid quarter of growth in the second quarter of 2022. The firm reported a significant increase in clients over the previous year, with the number of new clients tripling compared to the second quarter of 2021. These new client relationships are driven almost entirely by a growing interest in asset tokenization. (Crowdfund Insider)

Jack Henry joins hands with Google Cloud
Jack Henry, a leading provider of technology solutions to the financial services industry, announced a collaboration with Google Cloud to further enable its multi-year technology strategy focused on helping financial institutions innovate faster and meet the changing needs of account holders. (Finextra)

ACI Worldwide’s former banking unit debuts as fintech firm Dragonfly
Digital banking and wealth management firm Dragonfly Financial Technologies has launched as an independent company following the completion of One Equity Partners’ acquisition of ACI Worldwide’s corporate online banking unit. Dragonfly will add innovation to its product portfolio, expand its team and target more US and international merchant banking customers. (PYMNTS)

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