“Will Payments Expansion Overwhelm or Empower Banks?”
The growth of instant payments, stablecoins, and tokenized deposits is making payment operations more complex for banks. Rather than replacing existing systems, banks may need a central platform that can route payments across different networks based on cost, speed, security, and customer needs.
Seventy-two percent of U.S. children aged eight to 15 keep their money outside traditional banks, representing an estimated $28 billion to $30 billion, according to a recent survey. The findings suggest that banks have an opportunity to reach younger customers through family banking products before they turn to fintech providers.
“AI Boom Drives a Jump in Lending, but Bankers Still Sound Cautious”
C&I lending at the nation’s 25 biggest banks grew nearly 10% year over year in the third quarter, driven in large part by investments in AI infrastructure. Regional banks are also lending to construction and manufacturing companies benefiting from that growth, although executives remain concerned about lending too heavily to the sector and the risk of an AI slowdown.
Speaking of AI infrastructure, the rapid expansion of AI data centers is supporting economic growth but also pushing up electricity and construction costs, adding to inflation and complicating the Fed’s efforts to control it. Earlier this week, the FOMC voted 10-2 to keep its benchmark interest rate at 3.75% to 4%, with two officials favoring a quarter-point increase.
“Warren Urges Fed, OCC, FDIC to Restore Bank Examiner Powers”
Sen. Elizabeth Warren, D-Mass., is urging the Fed, OCC, and FDIC to reverse two policy changes that she contends limit bank examiners’ authority, arguing that the changes could weaken oversight of AI and cybersecurity risks.
“Why Big Banks Are Slamming the Door on AI Agent Access, and What They Want Instead”
Big banks are restricting access by third-party AI agents amid concerns about unauthorized transactions, customer data security, and liability. While executives see little immediate risk of customers moving deposits through AI tools, JPMorgan, Bank of America, and other institutions are working on safer ways for customers to use AI for banking.
This week, Jason Mikula, author of Fintech Business Weekly, joined Banking with Interest to weigh in on the potential impact of AI agents on bank deposits. He also discussed the OCC's recent debanking report, why the term has become so politicized, and where banks' responsibility to manage risk collides with customers' access to financial services.
“Ripple Gets OCC’s Unconditional Charter Approval”
Ripple received final approval from the OCC to establish a national trust bank, allowing it to hold digital assets for customers and manage reserves backing its RLUSD stablecoin. The company also expanded its partnerships with BNY and Robinhood, strengthening its ties to traditional banking and financial services.
In Other News
The U.S. economy grew at a 3.4% annualized rate in the third quarter, U.S. employee engagement fell to its lowest level since 2011, and can you guess what Steve Jobs believed exceptional leaders do that most bosses struggle with?
Thanks for reading.