OBSERVATIONS FROM THE FINTECH SNARK TANK
Senator Sherrod Brown (D-OH) took some potshots at Chime, digital banks, and fintechs in general, recently. As BusinessInsider reported:
“Brown warned that fintechs—often called neo-banks—that provide online banking services are potentially dangerous, and make users vulnerable to losing their money. Brown also said that privacy breaches, fraud, and hidden fees are also threats to be wary of when using these services.”
The article quotes Brown as saying:
“Fintech companies that want to act like banks–but without the consumer protections and safeguards that actual banks must adhere to–put people’s hard earned money at risk. Consumers shouldn’t be getting locked out of their accounts.”
Brown Outs in Logic
The Senator’s comments are blatantly wrong, as he is ignoring a number of facts and data points.
Chime—and other digital bank—customers are no more “vulnerable” to losing their money than customers of a licensed, chartered bank.
All Chime accounts are FDIC insured up to the standard maximum $250,000 per depositor, for each ownership category, in the event of a bank failure, through its partner banks, Stride Bank and The Bancorp Bank.
As for Brown’s comment on the threats of neobank-related data breaches, the senator must not have a Capital One credit card. If he did, he might remember the March 2019 hack of data from 100 million credit card applications dating back to 2005 that hit the card issuer.
And I guess he doesn’t recall the October 2014 cyberattack on JPMorgan Chase which impacted data from 83 million accounts.
These lapses of memory are odd considering the senator is no fan of the large banks.