Don't know what a fintech is, but sounds bad

Fintech is a portmanteau of the words “financial” and “technology”. Fintech refers to software, algorithms and applications for both desktop and mobile. In some cases, it includes hardware, too—like internet-connected piggy banks. Fintech platforms enable run-of-the-mill tasks like depositing checks, moving money between accounts, paying bills or applying for financial aid. They also facilitate technically intricate concepts, including peer-to-peer lending and crypto exchanges.

Businesses rely upon fintech for payment processing, e-commerce transactions, accounting and, more recently, help with government-assistance efforts like the Payroll Protection Program (PPP). In the wake of the Covid-19 pandemic, more and more businesses are turning to fintech to accept contactless payments or adopt other tech-fueled advancements.


All banks are using FinTech. It's been cool for the last 10 years, like Odyssey now saying a golf putter design uses Ai insights.
 
Yes, clearly the confusion comes in when people start talking about FinTech companies versus FinTech technology.

The media will persist in describing some companies as FinTech companies as it’s a hot new buzzword. Their criteria will be wishy washy.

I suppose a good rule of thumb is when you hear a certain company called a fintech company, see what they really do and whether they are subject to any regulation/oversight.
 
FYI Fidelity has SIPC coverage for securities and money market funds - guaranteed to $1.9 million per customer. All the CD’s it sells have FDIC coverage of $250,000 per bank. It’s up to the customer to insure they don’t exceed the limits. Financial Security: Account Protection | Why Fidelity

Be careful folks. I believe if Fidelity has a big problem, it will be the aggregate limit (ie total of all customer's losses as described below) that would kick in quite quickly. The devil is in the details.

-gauss

Fidelity's policy on this is available here and reads as follows:

Excess of SIPC

In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts, including losses due to market fluctuation. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.
 
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One remarkable aspect is the auditor, Ernst Young. They were fooled, assisted Wirecard in challenging the reporting, then stood by when it collapsed. Afterwards, EY declared they were responsible for discovering the fraud and alerting the authorities.

...
Not the first time E&Y were involved in a pretty large drastic failure. In an unprecedented move that rocked the financial industry to its core, on Sept. 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection.

Their auditors E&Y seemed to turn a blind eye (near bottom of the article):

 
Be careful folks. I believe if Fidelity has a big problem, it will be the aggregate limit (ie total of all customer's losses as described below) that would kick in quite quickly. The devil is in the details.

-gauss

Fidelity's policy on this is available here and reads as follows:

Excess of SIPC

In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts, including losses due to market fluctuation. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.
SIPC only covers cash awaiting investment. It does not cover the securities held for you. You will still own the securities. Most people’s cash is invested in a money market funds or bank deposits, including the core. The money market funds are also securities. So the cash awaiting investment and not yet pulled from your core account overall has to be very small.

Keep your most recent brokerage statements. Have a record of the securities held for you in your accounts at Fidelity.
 
SIPC only covers cash awaiting investment. It does not cover the securities held for you. You will still own the securities. Most people’s cash is invested in a money market funds or bank deposits, including the core. The money market funds are also securities. So the cash awaiting investment and not yet pulled from your core account overall has to be very small.

Keep your most recent brokerage statements. Have a record of the securities held for you in your accounts at Fidelity.
Thanks for the reminder. I haven’t been as consistent about this as I should be. *note to self* No more too busy with w*rk excuses!
 
What I find disturbing is the ownership/parent company allowed this to happen. A16Z-backed Synapse who "doesn't have the money" to figure that out? AH/A16Z could step in and help, but no.
 
This is going to come off sounding a bit like a middle age rant, but so be it.

On the one hand, this sounds like many of the hard luck stories from the housing meltdown. People don’t read the fine print and don’t understand what they’re signing up for. You can buy a house with no income and no money down? Yes!

No. Well, yes, but did you read the part where your rate increases from zero to 10% after 5 years and run the math on what that means? You didn’t.

Fast forward to today and you have an entire cohort of people who have been consuming social media like it was news (and not a bunch of solitary schmucks broadcasting stream of consciousness drivel that is packaged as fact) who are RIPE to fall prey to garbage they see online. Why? Because reading comprehension and critical thinking has been sacrificed to 10 second videos and attention spans that lose focus the more they swipe left. Because if you got 1 million followers you must be right.

And so here we are. The land of uneducated social media influencers being paid to promote garbage to ill informed followers.

Just the latest iteration of the traveling medicine shows where people could buy Dr. Gallants Rejuvenating Tonic and Body Elixir that cures everything.
 
Why? Because reading comprehension and critical thinking has been sacrificed to 10 second videos and attention spans that lose focus the more they swipe left. Because if you got 1 million followers you must be right.
Well said.
 
FWIW; PayPal 'Savings' (where you keep excess funds and earn interest on them) is actually FDIC insured;

PayPal Savings
Funds deposited into PayPal Savings are held at Synchrony Bank, a member of the FDIC, and are eligible for up to $250,000 in FDIC insurance"

As others have already said, 'FinTech' is so ubiquitous that virtually everyone is involved with it in some way. On the far end of the FinTech spectrum; I'm fascinated by blockchain technology and smart contracts that basically enable people to be their own bank. I find it a great way to better understand banking. It sheds plenty of light on the vulnerabilities of our existing fractional reserve banking system.
 
FWIW; PayPal 'Savings' (where you keep excess funds and earn interest on them) is actually FDIC insured;

PayPal Savings
Funds deposited into PayPal Savings are held at Synchrony Bank, a member of the FDIC, and are eligible for up to $250,000 in FDIC insurance"

As others have already said, 'FinTech' is so ubiquitous that virtually everyone is involved with it in some way. On the far end of the FinTech spectrum; I'm fascinated by blockchain technology and smart contracts that basically enable people to be their own bank. I find it a great way to better understand banking. It sheds plenty of light on the vulnerabilities of our existing fractional reserve banking system.
I wish that, in general, we could stop referring to cryptocurrencies as “currency”. In my view, it is a speculative asset in the same way that gold is a speculative asset or a painting is a speculative asset. All have a limited supply and people hold it in the hopes somebody may wish to pay more for it later. And it’s the speculative nature and price instability that, to me, disqualifies calling cryptocurrency “currency”. Tulip bulbs weren’t currency and neither is frozen, concentrated orange juice.
 
FWIW; PayPal 'Savings' (where you keep excess funds and earn interest on them) is actually FDIC insured;

PayPal Savings
Funds deposited into PayPal Savings are held at Synchrony Bank, a member of the FDIC, and are eligible for up to $250,000 in FDIC insurance"

As others have already said, 'FinTech' is so ubiquitous that virtually everyone is involved with it in some way. On the far end of the FinTech spectrum; I'm fascinated by blockchain technology and smart contracts that basically enable people to be their own bank. I find it a great way to better understand banking. It sheds plenty of light on the vulnerabilities of our existing fractional reserve banking system.
I have no idea what is an is not insured...

But the article said that the people who lost money were also FDIC insured... but found out that it was not true...

Yes, when the money actually got to a bank it was insured but the money missing never did get there (well, they are not sure where it went so maybe it did make it to some bank)...
 
It’s not the same when you give your money to a 3rd party and rely on them to transfer it to the FDIC bank. I am trying to understand the attraction of these services. Is it that difficult to deal with established banks and credit unions?
 
Let’s please not bring cryptocurrency into the discussion.
 
I never really thought about FinTech vs. "banking." But you might say I've been following the same advice some have mentioned, above.

I use "real" banks for any "real" assets. I use things like Venmo, Zelle and PayPal for convenience. I see ads from those, and others, for other financial services, and just ignore them.
 
It was always baffling to me, as to what's so wrong or inconvenient about conventional banks or credit cards, that this snazzy new "fintech" is somehow desirable or even needed. What does PayPal do, that Visa or Mastercard don't? What does this Yotta do (or did), that a regular bank or credit union does not?

In other words, what exactly is the problem, that somehow merits a solution? And: just because we have something novel, innovative and clever... is it really useful?
 
It was always baffling to me, as to what's so wrong or inconvenient about conventional banks or credit cards, that this snazzy new "fintech" is somehow desirable or even needed. What does PayPal do, that Visa or Mastercard don't? What does this Yotta do (or did), that a regular bank or credit union does not?

In other words, what exactly is the problem, that somehow merits a solution? And: just because we have something novel, innovative and clever... is it really useful?
You mean a solution in search of a problem? Yeah, I don’t get it either for the reasons you just outlined.
 
It was always baffling to me, as to what's so wrong or inconvenient about conventional banks or credit cards, that this snazzy new "fintech" is somehow desirable or even needed. What does PayPal do, that Visa or Mastercard don't? What does this Yotta do (or did), that a regular bank or credit union does not?

In other words, what exactly is the problem, that somehow merits a solution? And: just because we have something novel, innovative and clever... is it really useful?
I agree but In the case of paypal they do offer a service that expedites online purchases securely. I don’t have to provide the seller with any personal info. The seller does not have access to my accounts. I don’t keep any balances with Paypal, though. I can’t figure out what the advantage to any of the other dozen or so places. Some offer early pay but my credit union has that now too.
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We’ve used PayPal for decades, since the early 2000s. They’ve become a trusted intermediary for me. I only use them for online shopping and PayPal has 3 of my credit cards. I prefer using PayPal when shopping at lesser known web sites so I don’t give them my card info directly. Also handy for international sites that often accept PayPal with no fee. I don’t really use any of the newer payment systems except for ApplePay which I consider the most secure both for online and in store.
 
I buy used car parts from ebay and random sellers sometimes and Paypal works well. I confess to ordering an item that I knew was TGTBT but I went ahead with the order because they accepted paypal. Sure enough the seller ghosted me but Paypal issued a prompt refund.
 
I've had problems with PayPal and eBay. eBay considers the item "shipped" when the seller enters a shipping number. Of course this only means the number was issued, not that the item was actually dropped off at the shipper's location, or that whatever was shipped was what you ordered.

That starts a clock - something like 90 days or whatever. During that time you're expected to wait to "allow time for delivery" before requesting a refund.

Even if the seller has been taken down by eBay because of fraud, or the shipping company has no record of ever receiving the item the shipping number was issued for, you have to wait before requesting a refund.

Then, after the 90 days, it's too late to request a refund.
 
Lots of these fintech companies drew people in who could get their paycheck 3 days early !! While they claim to be holding the money in FDIC banks, the money is not held there until it's actually there.
It's basically allowing a bunch of strangers control over your money without banking regulations in place.

Sad for those people, but it's also sad when I put $$ in a stock and it drops.
This will be a mistake they don't repeat.

And the whole 3 days early thing is such a weird gimmick, once you get it 3 days early the first time you will then after get it every two weeks just like before.
 
And the whole 3 days early thing is such a weird gimmick, once you get it 3 days early the first time you will then after get it every two weeks just like before.
It’s for people that either cannot budget and exert self control or are in a bad place financially and are paycheck to paycheck.

But certainly the fintech offenders we are talking about here easily snag the college educated 20 something crowd. I’ve overheard newly graduated engineers at my megacorp discussing some of these items with each other. Good luck with that.
 
It’s for people that either cannot budget and exert self control or are in a bad place financially and are paycheck to paycheck.

But certainly the fintech offenders we are talking about here easily snag the college educated 20 something crowd. I’ve overheard newly graduated engineers at my megacorp discussing some of these items with each other. Good luck with that.
Or you know how to play the game, I am $1k richer on the crazy bonuses these firms offered. We have Chime, Cash App, (former) Bloom, and others. I am a big fan of free money.
 
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