The Kritik of Reality (TWIF 4/18)

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💭 One Big Thought: The Kritik of Reality

In high school, I enjoyed competing in Lincoln-Douglas debate, a format modeled on a series of seven debates in 1858 between Abraham Lincoln and Stephen Douglas. The format requires two contestants to debate for and against a resolution, and prepare cases for both sides in advance.

One of the more interesting LD strategies was the Kritik: an argument that the basic idea you were debating didn’t make sense to begin with. "Kritiks will often ignore the established resolution in favour of offering a criticism of a structure or system of beliefs."

Each day there are more and more examples of prominent people running Kritiks against expertise, against the scientific method, and against the idea of objective reality itself. We are entering an interesting post-truth era – the fake news era – where the basic concept of reality is under question.

Expertise has been under assault for the better part of the decade. And the mistrust isn’t entirely misplaced: in science and academia, there’s a reproducibility crisis. Results don’t hold up between studies. Scientists use p-hacking to make inconclusive papers seem conclusive. Researchers build their reputations on gaming citations instead of doing groundbreaking research.

People care about certainty.

If expertise only gives you probability, it's tempting to discard it for any answer that gives you certainty.

And like any good Kritik: you can’t debate the facts if you can’t agree on what the facts are to begin with.

The Kritik of reality cracks the door open for voodoo; it creates an opening for opinions to replace facts.

This is certainly visible in fintech, where we're living in the Golden Age of Scams. People lose more and more money to financial fraudsters, some of whom are then exonerated – or even rewarded – for financial fraud. This 'vibe shift' is visible across the world of technology:

Why does this matter to fintech?

In a larger sense, when we can’t agree on reality, it’s more difficult to learn, to build, and to improve. When your engineers tell you “the product works great, it’s the customers who are wrong,” or your marketers tells you “our messaging is perfect, people just don’t understand it,” or investors tell you, “I pick the best companies, the market just refuses to recognize that,” that’s the post-truth Kritik at work.

But building depends on facts. Investing depends on facts. Economics depend on facts. Financial services depend on facts. The idea that facts are not facts is corrosive to the mission of building good products.

We need to move to beyond the post-truth era.

Progress depends on agreeing to reality, and reality does not care about opinions.

Please enjoy another week of fintech and banking news below.

(👍👎 Have feedback for us? Let us know. Find me at @nikmilanovic, @twifintech, and @ndm)

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​US Bank launched a spend management platform for business owners, offering real-time visibility into card-based spending and enabling users to set controls and monitor cash flow through a unified dashboard.

Federal Reserve Chair Jerome Powell mentioned that as crypto is becoming more mainstream, there's a need for a legal framework for stablecoins. He said that "banking regulation around crypto will likely be “partially relaxed.”

The House of Representatives voted to overturn a CFPB rule that would have extended oversight to Big Tech payment apps like those from Apple, Google, and X. A District Judge also invalidated the CFPB's rule capping credit card late fees at $8, siding with arguments that the rule violated the Credit Card Accountability and Disclosure Act by preventing issuers from charging fees deemed reasonable and proportional to violations.

Mastercard partnered with Bleap to issue a new stablecoin-backed self-custodial card.

The Trump administration announced plans to terminate the IRS Direct File program, a free tax-filing service initiated under the Biden administration, making it once again more expensive and more difficult for the average American taxpayer to file their taxes.

The Bank of England reported that implementing offline payment functionality for a potential digital pound (a CBDC) is technically feasible but presents challenges.

So far this year, subprime credit card delinquencies are falling:

"If you find yourself on the wrong train, get off at the next stati0n." - Charles Miller

Branch expanded its workforce payments platform by introducing a full-service paycard, enabling employers to offer features like cashless tips, earned wage access, and same-day pay without pre-funding.

Revolut announced a rewards-based credit card using its RevPoints system, aiming to compete with established players like American Express by offering tailored rewards across its subscription tiers.

Embedded payroll provider Zeal* built automated reserve top-ups to monitor reserve levels in real time, refill funds automatically, and prevent payment interruptions before they happen.

Banking, accounting, and tax platform Lili rolled out a suite of tools aimed at assisting online merchants in expanding and scaling their operations.

​Hosted checkout provider Bolt launched a new 'superapp' integrating crypto trading, peer-to-peer payments, and a rewards debit card, positioning it (you know, in theory) as an alternative to platforms like Coinbase, Zelle, and PayPal.

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Dutch neobank Bunq filed for a US broker-dealer license to offer investment and cash management services, marking a strategic step toward reapplying for a full US banking license after withdrawing a previous application.

​British neobank Starling Bank expanded its SaaS platform, Engine, to the US market, aiming to provide its digital banking infrastructure to North American financial institutions.​

Seychelles crypto exchange OKX launched its centralized exchange and Web3 wallet in the US.

Coinflow Labs* is partnering with Circle for USDC minting, connecting directly to RTP networks in the US and EU, and integrating with existing card networks, resulting in significant cost savings and reduced settlement times for clients.

Global payments platform PingPong partnered with identity and business verification provider Trulioo.

Ballerine joined the Mastercard Engage Partner Program to enable financial institutions and payment providers to streamline KYB, fraud detection, and risk monitoring.

Privy partnered with Spark to simplify the development of Bitcoin-powered applications. This alliance allows developers to onboard users swiftly through embedded wallets, eliminating the need for browser extensions or seed phrases.

Klarna collaborated with Clover, a point-of-sale platform by Fiserv, to introduce in-store BNPL options across 100,000 U.S. merchant locations.

Better Mortgage restructured its financing agreement with SoftBank, replacing a $530 million convertible note with a $110 million immediate cash payment and a new $155 million senior secured note due in 2028 at a 6% interest rate. This move alleviates the personal liability of CEO Vishal Garg and adjusts the company's debt obligations amid financial challenges.

Rippling is attempting to serve legal papers to Deel's CEO, Alex Bouaziz, in a lawsuit alleging corporate espionage, but faced challenges locating him, leading to considerations of alternative service methods. Rippling is also seeking legal action to compel Revolut to disclose the identity of an individual who allegedly facilitated payments to a former Rippling employee accused of corporate espionage on behalf of Deel.

Block agreed to pay a $40 million fine to the New York Department of Financial Services for failing to adequately manage anti-money laundering measures and know-your-customer compliance within its Cash App service.

The founder of Nate, Albert Saniger, faces charges of securities and wire fraud after it was revealed that the company's AI-driven shopping app relied heavily on human workers in the Philippines to process transactions, contrary to claims made to investors about its automation capabilities.

New York Attorney General Letitia James filed lawsuits against DailyPay and MoneyLion, accusing them of offering predatory payday loans disguised as earned wage access services.

Anchorage came under investigation by the U.S. Department of Homeland Security's El Dorado Task Force for potential violations related to money laundering and financial crimes.