Hi and welcome to the August Monthly Fintech Macro.
I have spent a lot of time reading US political news this month, so that’s where we will start off. Of course rates have yet to be cut but there is always more to say about that. Should we be worried about stagflation? Does open banking still exist? Who is going public? A lot of questions to answer and think about for this month.
1. The CFPB is not done with Open Banking
The Consumer Financial Protection Bureau seems to still have some life and reopened open banking rules, promising consumers more control over their data. In reality, this is a question of compliance.
While DOGE and Vought effectively weakened the CFPB, we’ve seen some states pick up where the CFPB left off. New York state sued EWS, the operator of Zelle, for being scam-friendly and doing too little to prevent fraud - a lawsuit that the CFPB had dropped. The question for open banking this time around is whether U.S. regulators will actually force banks to share data, or if it again becomes a moot rule.
As with New York State’s EWS lawsuit, will more regulatory actions come from individual states? This will then lead to questions of enforcement as no rulings will have federal scope requiring widespread compliance.
Open banking has been maybe over-discussed, but it is good for fintechs. The more interesting question is what happens if open banking is only semi enforced. Does that leave an opportunity for banks and other data repositories to monetize an incomplete open banking? Meaning if open banking isn’t fully standardized, will a third party emerge that makes money by bridging the gaps — charging others for a clean, reliable version of “open” financial data? An “open”-banking middle man of sorts? What does that look like? What is the dollar value of open banking to different participants in the ecosystem – fintechs, banks, and consumers? Up to what dollar amount is getting access to open banking worth it? Should I start a business?
Alternatively - fintechs may start to look outside of the US market. On August 22 Bloomberg reported that Visa shut down its US open banking business. Visa is instead going to focus on open banking in Europe and Latin America. Will other companies follow suit?
2. US Government buying a stake in Intel
The era we're in right now suddenly has a tinge of state-owned capitalism.
This is a really interesting piece of news - the US acquired 9.9% of Intel, but they are non-voting shares so the government will not have any board seats or governance control. The intention is to boost U.S. chipmaking capabilities and regain technological leadership amid global competition—mainly against China. When you look at the details this is not state ownership, just market interference in a not-completely-free market. Yet there are still many valid concerns.
Is this normalizing future government acquisitions in private companies? Will grants and loans be out and acquisitions in? My biggest problem with this, especially in the fintech worl, is what if someone else can do it better? What if Intel has lost its touch and someone else can make chips better, cheaper, more efficiently? The natural market mechanisms won’t be able to take place because the US government can’t be the loser here. Now effectively, Intel can’t fail. This is a big market distortion and can halt innovation.
Beyond future chip companies, this can also have huge meaning for fintechs. While Intel makes chips and chips are essential, can a fintech that positions itself as essential end up in this same position? Will that government acquire a small percentage of their company? Would that be good for the industry? Cementing the importance of a fintech product at the cost of a bit of freedom?
The real questions here are market questions: Does government ownership encourage investment? Does it create confidence in the market? Does it depend on how the US government frames it and their involvement? There is so much unknown here for now, but it will be interesting to think about and see play out.
Graph Intel Stock Price over the Past Year from the WSJ
3. Figure Goes Public, Alone
Figure filed to go public— the only major fintech IPO of the month. It’s a milestone for blockchain-based lending and securitization, but notably it is alone. Stripe and Plaid are still private, talk of Klarna going public has trickled down.
For the economy, this shows capital markets remain wary of fintech. Investors are demanding profitability, not growth-at-all-costs, and the sector hasn’t delivered enough of it. The S&P’s financials index has gained weight from legacy banks while fintech’s market share has shrunk.
For fintech founders, the message is brutal: don’t expect public markets to rescue you. Private valuations are still being marked down, crossover funds aren’t showing up, and Figure’s IPO may prove more a one-off than a turning point. Unless fintechs can demonstrate durable revenue and disciplined credit models, they’ll remain stuck in the funding desert.
4. Of course, we can’t go without talking about the rate cuts
At Jackson Hole, Powell hinted at potential cuts after nine months of rates being held. Markets rallied, yet there is a fear of stagflation. I don’t think I’ve heard the word stagflation since my Econ 101 class freshman year of college. Stagflation is marked by two bad things happening at once - high inflation and high unemployment. Notably employment has been a bit stagnant, hence why there have been so many articles about how hard it is to find a job in today’s economy.
Stagflation is also hard to combat. It leaves the Fed with no simple moves to help the economy, everything movement of the interest rate and every injection of money into the economy must be done just so. Cutting too soon risks reigniting inflation; cutting too late risks preventing growth and rising unemployment. Tariffs add another layer onto the problem by raising import costs, making goods more expensive, and jeopardizing trade relationships. Really, I would not want to be Powell.
For fintechs, the implications are direct. If stagflation sticks, credit quality deteriorates, funding opportunities dwindle, and customer acquisition slows. Consumer fintechs relying on spending or borrowing are vulnerable. Infrastructure fintechs that help incumbents cut costs or manage risk are less vulnerable, but not forever. In all, stagflation will be bad for everyone. I hope we avoid it.
Graph of hire rate from FRED.
Au Revoir
August was another entertaining month of news. How will I spend my free time when political news is not like reality tv?
What will September bring? Will Powell cut rates? Will Powell still even be in charge of cutting rates? Will there be multiple new Fed board members? Will tariff wars restart? What will funding look like? How will the markets do?
