Fintech Takes

Fintech Recap: Regulator Shuffle, Varo's Struggles, and BNPL's Dark Side

Mar 5, 2025

Tune in for a dive into the latest regulatory upheavals affecting fintech and the potential consolidation of banking supervision. Varo's struggles as a once-promising bank underscore the challenges of balancing responsibility with competition. The dark side of Buy Now, Pay Later comes to light, revealing its impact on subprime borrowers. Also, hear insights on the skepticism surrounding cryptocurrency and the humorous critiques of lawmakers during congressional hearings. It's a whirlwind tour through the complexities of the modern financial landscape!

01:13:03

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Episode notes

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Quick takeaways

Significant regulatory changes in Washington, D.C., particularly at the CFPB and FDIC, threaten consumer protection and financial stability.

Varo Bank's journey illustrates the difficulties faced by de novo charter banks in balancing compliance with the need for competitive flexibility.

Buy Now Pay Later (BNPL) services, while intended to assist low-income borrowers, reveal potential risks and credit issues, particularly among deep subprime users.

Deep dives

Upcoming FinTech Meetup Excitement

The hosts are preparing for the upcoming FinTech Meetup in Las Vegas, where they will have the opportunity to connect in person. Alex Johnson is excited to attend for the second time, noting he previously missed out due to a personal commitment. Each host has a panel to moderate, with Jason Mikula discussing the future of banking as a service with industry experts, while Alex tackles the future of open finance. The anticipation for networking and exchanging insights about their respective panels adds to the excitement of this event.

Intro

2min

Excitement for the FinTech Meetup

5min

CFPB Shutdown and Regulatory Turmoil

20min

Vero's Fintech Struggles

13min

Exploring Buy Now, Pay Later: Insights and Implications

16min

BNPL Data and Credit Scoring

12min

Congressional Clown Shows and Crypto Conundrums

4min

Navigating the Skepticism of Cryptocurrency

2min

Welcome back to the Fintech Takes podcast. I’m Alex Johnson, and as always, I’m joined by my partner-in-crime, Jason Mikula. Today, we’re unpacking the chaos around regulatory shifts, fintech's shifting landscape, and the not-so-rosy reality of BNPL.

First up, we're diving into the latest news coming from D.C. The Trump administration is considering consolidating bank supervision under the OCC, with reports of employee transfers from the FDIC and CFPB in the works. The possible gutting of agencies and the shifting regulatory approach isn’t exactly a surprise, but we’re seeing this transition go from theoretical to action. What’s at stake for banks and fintechs?

Next, we dive into Varo’s challenges as the first fintech to snag a de novo bank charter during fintech 1.0’s big promises. Once a leader, Varo is now facing financial losses and a shrinking customer base, while rivals like Chime scale quickly. Varo’s struggles highlight the tension between building responsible products for underserved communities and navigating complex regulatory oversight. Its de novo charter has tied its hands, making it harder to compete in a fast-moving market where flexibility is key.

The January CFPB report on Buy Now Pay Later (BNPL) brings eye-opening insights. Despite its claim to help those without credit, 45% of BNPL loans go to deep subprime borrowers, not credit newbies. The data also shows users stacking loans across providers, with rising credit card default rates. The takeaway: BNPL’s shiny promises don't align with its impact. Plus, we’re keeping the BNPL convo going with a rapid-fire round of updates.

Finally, we wrap up with a few rants you won’t want to miss—like the transparency crisis in financial services and crypto. Powell’s vague responses to Synapse’s failures highlight a deeper issue: accountability. Meanwhile, crypto’s obsession with meme coins is sinking to new lows. Where have all serious players gone? We're diving in.

00:04:50 - Washingtonian Recap

00:26:41 - Varo’s Charter Conundrum

00:40:59 - BNPL News, Grab Bag Style

01:07:45 - Can’t Let It Go

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