The true fintech pioneer in the US? American Express is breaking borders
When it comes to fintech, the US is somewha...
American Express and Nova Credit team up to launch a new service that will shape the US fintech landscape
When it comes to fintech, the US is somewhat behind the curve as opposed to peers across the pond in Europe. This comes down to a number of factors, namely the size of the region and the multitude of regulations from state to state, slowing down the rate of payments internally, let alone internationally. American Express is a household name across the world, so it is no surprise that the globally integrated payments company would be at the forefront of the US drive toward seamless payments.
The latest in American Express’ portfolio of partnerships is Nova Credit. The partnership will set out to assist non-native populations gain access to US credit cards. Customers will be able to use their international credit status in order to obtain a US credit card. The company will be the first payments company to offer both immigrants and expats to the US from Australia, Canada, India, Mexico and the United Kingdom the ability to use Nova Credit’s Credit Passport® technology. This enables credit records from some international credit reporting agencies to be translated to a US-equivalent in real-time. This is an industry first, as previously credit history would stop at the border
Sara Milsten, Senior Vice President, New Member Acquisition, U.S. Consumer Services at American Express said: “We want to help remove a barrier for millions of people who’ve been otherwise ignored by the U.S. financial system.
“Thanks to Nova Credit’s Credit Passport®, we can offer newcomers from five international countries the ability to share their credit history with us ‐‐ making it possible for American Express to extend credit to more people.”
- FinTech profile: Starling is a new household name
- North American banks could lose $88bn in payments to fintechs
- As Uber, BBVA and Mastercard launch debit card, cash payments remain ‘constitutional right’
- Read the latest edition of FinTech Magazine, here!
“We believe that no matter where you build a credit history, you should be able to keep it,” said Sarah Davies, Head of Risk & Analytics at Nova Credit. “By translating international credit records from top bureaus around the world into a U.S.‐equivalent score and enabling newcomers to share their credit history with U.S. underwriters like American Express, we are helping people who move to the U.S. to arrive and thrive.”
For more information on all topics for FinTech, please take a look at the latest edition of FinTech Magazine.
Robinhood faces $35mn fine from New York DFS
The company’s crypto division was issued with a wrist slap in 2020, following the red flagging of several “matters requiring attention”. Robinhood revealed it had reached a settlement with the New York State Department of Financial Services regarding the issues, which related to “alleged violations” of cybersecurity and anti-money laundering rules.
The news follows on from the announcement earlier this week that the trading platform favoured by armchair investors, which almost broke Wall Street earlier this year, has an expected valuation of $35bn following its IPO.
Critics of the platform say Robinhood encourages “risky behaviour” among inexperienced (armchair) investors. The app has also been criticised for not informing customers that much of its profits are generated by routing their trades to Wall Street firms taking the other side, or so-called "payment for order flow."
Robinhood said last month they expected the DFS fine to be at the $15mn mark, adding it would be “the bottom of the range for our probable loss in this matter”. The $35mn penalty is on top of the record $70mn Robinhood incurred from US financial regulator FINRA in June, for “lax vetting and outages.”
However, the settlement indicates the company’s IPO will go ahead as planned, despite initial concerns the investigation could see the float delayed until later this year.
Robinhood floats imminent
Despite the regulatory hiccups, Robinhood priced its IPO between US$38-US$42 per share, giving the platform the US$35bn valuation and analysts predict the firm’s debut on the Nasdaq could occur as early as next week.
Robinhood democratising investment
Launched in 2013 by Tenev and Bhatt, who were Stanford University roommates, Robinhood’s founders will retain most of the voting rights after the IPO. Bhatt reportedly holds 39% of the voting power of outstanding stock, while Tenev holds 26.2%.
The online brokerage, which came under fire for its handling of the GameStop trading debacle, which saw the platform limit stocks to investors, states its mission is to “democratise” investing and is one of the most highly anticipated IPOs of the year.
Robinhood was valued at $11.7bn in autumn 2020 following a private equity funding drive. The new valuation will mean represent a three-fold increase in the company’s market value in less than 12 months.