Nov 11, 2020
Personal Finance News & Trends (11.11.20)
Bi-weekly updates on personal finance, fintech, the US economy, and more
US Economy
The Future Is a Mystery, the Past Is History
The economy continues to recover, while the next administration’s policies are still unclear
As the election dust settles, it’s unclear what the future administration’s economic policy will look like and how it will affect American households’ pockets.
Meanwhile, the economy continues to slowly recover:
- Job growth for October was stronger than expected, as the unemployment rate dropped to 6.9%.
- Personal income and personal consumption expenditure both increased by 0.9% and 1.4% — respectively, according to the Bureau of Economic Analysis.
- The stock market is also reacting in a very positive way. The S&P 500, for instance, registered its best weekly performance since April last week.
Even though the markets seem poised to be bullish no matter what.
An Injection of Optimism
The latest news on an effective Covid vaccine caused a spike in the markets… and even mortgage rates
News of a successful test of Pfizer’s Covid-19 vaccine caused a wave of optimism.
Airlines, cruise companies, cinema chains, and other representatives of the “old normal” saw their shares spike — while the facilitators of work/study/entertainment from home, like Netflix and Zoom, were in the red zone.
Interestingly, mortgage rates have also risen by 0.8% on Monday— breaking a negative streak.
Industry News
Un-unbanking
US unbanked households at a record low; Mobile banking at a record high
A new report by the Federal Deposit Insurance Corporation (FDIC) reveals interesting data on the banking industry's pre-pandemic state.
The share of US households without a bank account shrunk to 5.4% in 2019 — a record low. The report further reveals this demographic's potential: around 25% have expressed a desire to open a bank account.
Mobile banking grew sharply and more than doubled from 2017 to 2019.
It is still unclear how the pandemic affected these trends, but it will be interesting to see how challenger banks and other fintechs manage to make the most of the situation.
Corporate and Partners News
Growth through acquisition
A bevy of acquisitions and partnerships in the lending and insurance industries
NerdWallet acquired small business marketplace Fundera at the beginning of the month. The company that aims to be “the Yelp for finances” was mostly focused on consumer finance. Now it’s dipping its toes in the business loans sector.
Insurance marketplace Coverhound was acquired by insurance broker Brown & Brown.
Another financial giant looking to expand their business by acquisition is Square. The payments and trading company is reported to be in talks to buy Credit Karma’s tax-preparation business.
More opportunities
Opportunity fund teams with Funding Circle and Lendio to provide loans for SMBs
Speaking of the business loans sector, Opportunity Fund partnered with online lenders Lendio and Funding Circle to provide financing to struggling small businesses.
With this partnership, the US-based nonprofit organization aims to provide SMBs with “access to affordable, responsible, transparent credit.”
Other News
Bonus
Escobar vs. Klarna
Pablo Escobar’s brother is suing the fintech company in the US
Escobar Inc claims that Klarna — the Swedish based bank, payments provider, and lender — is withholding €400,000 that belong to the company.
The money was raised mostly by selling mobile phones, branded with Escobar’s name and logo.
The firm was established in 1984 by the deceased Colombian kingpin’s brother Roberto Escobar.
It’s not Escobar Inc’s first encounter with the fintech industry. In early 2018, the company launched its own cryptocurrency: Diet Bitcoin, through an Initial Coin Offering (ICO).
The article was written by Michael Pearl — Head of Content at Natural Intelligence. Email: michael.pearl@naturalint.com
