Fintech Summer School 2024

Josh Rubin, VP of Legal Betterment, explains how bank-fintech partnerships unlock innovations in financial services.

For example, as Rubin explains, “Betterment opens accounts directly with program banks and allocates customer deposits across those accounts. This allows us to offer a highly competitive interest rate as well as multiples of the FDIC coverage that would be available to customers if they opened accounts directly at any of our program banks.” 

More broadly, Rubin highlights, “partnering with banks has been a critical tool in helping Betterment to diversify beyond its core investment advisory services” and offer products that their customers want, expanding access to financial services in the process.   

Herman Man, Chief Product Officer at Bluevine, discusses the biggest challenges facing small businesses and how fintech can help. 

Managing cash flow is a major hurdle for startups and small businesses. That’s because 1) entrepreneurs are busy running their businesses, 2) financial management, banking, and accounting are only a part of their jobs, 3) business owners often piece together a solution using different apps and providers for tasks like checking accounts, invoicing, credit cards, and accounting, and 4) roughly half of small business owners use their personal credit cards for business expenses. 

“All of this together makes it hard to get a picture of cash flow,” Man explains. “One of fintech’s superpowers is creating a central view of a company’s finances by bringing together all the critical information from various parts, including accounting, apps, and tools.” 

Bluevine’s platform consolidates all financial data into a single, easy-to-use interface. By integrating information from various tools—starting with the business checking account—Bluevine helps entrepreneurs get a clear, real-time view of their financial position.

Danielle Aviles Krueger, Head of Government Relations and Public Affairs for the US at Klarna, explains how consumers can unlock financial flexibility with Buy Now, Pay Later (BNPL). 

BNPL is a payment solution that empowers consumers to split the cost of purchases into manageable, often interest-fee, installments. This product helps make larger expenses more affordable by breaking payments into smaller chunks over a few weeks. 

Consumers choose BNPL because it offers an “easy-to-understand payment option where they fully understand the payment structure and any fees associated with the product,” says Aviles Krueger. In addition, Klarna has built-in consumer protections, like transaction underwriting, payment reminders, and pausing consumer accounts if they fall behind on payments. 

She also emphasizes the importance of transparency with BNPL offerings, stating, “Earlier this year, we released data on our product performance in the US in 2023…this data showed that 96% of consumers last year did not pay a late fee when they used Klarna BNPL product.” As BNPL product use continues to grow across all demographics, BNPLs like Klarna are leading the way in making responsible financial innovation accessible to everyone.

Meredith Fuchs, General Counsel at Plaid, explains the concept of open banking and why it matters to consumers. 

“Not long ago, consumers had one checking account at one bank and very few options in the market for services from anyone else,” said Fuchs. “If you wanted to connect your bank account with another institution, it wasn’t very easy. Fast forward to today, consumers have multiple financial apps on their phones, where a traditional app often sides beside a handful of fintech apps.” 

Open banking made this shift possible by enabling consumers to securely bring their finances online. Over eight in 10 Americans now use fintech apps, easily connecting their bank account to financial apps and services like spend management, investing, or shopping for a mortgage. Today, Fuchs reflects, “Open banking is foundational to how we manage our money.” 

The Consumer Financial Protection Bureau is expected to finalize a critical rule this fall to provide rules of the road for open banking and reaffirm consumers’ rights to securely access and share their financial data. “We believe in a future where consumers are in control of their own data,” concluded Fuchs. “This is something FTA has long championed —from increased competition, to lower costs, to better service and more control over your financial life.” 

Rina Wulfing, Senior Policy Lead for North America at Wise, unpacks the anatomy of a cross-border payment. 

Cross-border payments used to be slow, expensive, and lacking transparency. However, fintech companies like Wise are leveraging technology and world-class financial infrastructure to make these transactions faster and more affordable. 

Wulfing gives an example of sending money to her sister, who lives in Indonesia, a transaction that used to take days but now moves instantly at a fraction of the cost.  “If I go through my regular bank, that payment would hit a bunch of intermediaries along the way. Each of these steps represents a fee and a delay,” says Wulfing. “But with Wise, we have a closed-loop system, and the money doesn’t cross borders at all. Instead, Wise will send money from my US bank account details to my Wise Indonesia bank account details and then pay out to my sister in local currency.” 

Moving forward, Wulfing also emphasizes the importance of direct access to payment systems. We have an opportunity to save people even more time and money with one simple yet powerful policy change,” she explains. “In many countries, Wise has direct access to the country’s central bank payments system, which means we don’t have to go through a bank to send a payment that we could securely make ourselves.” Providing direct access in the US  would further reduce costs and improve speed, helping millions of people who rely on cross-border payments, including immigrant families, small businesses, and service members abroad.