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Guest post by Erica A.N. Kramer and Justin B. Hosie*
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On February 18, the Consumer Financial Protection Bureau (CFPB) released the final version of its Policy on No-Action Letters. The policy is part of the CFPB’s Project Catalyst Initiative whose stated mission is to “support innovators in creating consumer-friendly financial products and services.” The new policy is designed to further the initiative’s mission by allowing developers of new consumer financial services to submit a request to the CFPB for a “No-Action Letter” regarding their innovation’s regulatory compliance.

The most important feature of the No-Action Letter is that it will include a statement indicating that “[CFPB] staff has no present intention to recommend initiation of an enforcement or supervisory action against the requester in respect to the particular aspects of its product under the specific identified provisions and applications of statutes or regulations that are the subject of the [No-Action Letter].” In other words, a No-Action Letter provides an innovator with a green light indicating that the proposed product or service does not conflict with cited statutes or regulations.

In fact, the Supplementary Information included with the policy goes so far as to indicate that CFPB staff would not recommend an enforcement or supervisory action against the holder of a No-Action Letter, absent new or extraordinary circumstances. To borrow from MasterCard’s commercials, the value of a regulatory green light from the CFPB in today’s environment is “Priceless.”

In addition to the No-Action Letter itself, the CFPB believes the new policy encourages informal preliminary discussions. This presents a unique opportunity to participate in an open dialogue with your regulator while still in the development stage. Ultimately, this dialogue will likely increase your chances of producing a final product perceived as both legally compliant and beneficial to consumers.

When the CFPB initially proposed the policy, some critics argued that requiring innovators to produce voluminous information and identify rules that may conflict with the product was overly burdensome. Unsurprisingly, the CFPB declined to remove this requirement in the final policy. Contrary to the way product development works in the real world, the CFPB expects you to either thoroughly analyze potential regulatory risks before launch, or face its wrath.

Since this policy is in its infancy, there is no way to know whether it will be efficient or effective. The CFPB admits it will only provide No-Action Letters in “exceptional circumstances.” However, that does not mean you should pass up the opportunity to request one, especially if you think you have something “exceptional” to offer.

We encourage you to view this policy as a useful tool in your arsenal. We recommend that you first engage in an objective and thorough analysis of the perceived risks and benefits of the new service. Once you’ve done so, contact a lawyer experienced in the fintech industry (hint, hint*) who can assist you in identifying potential regulatory pitfalls and help you draft a persuasive request for a No-Action Letter. While the process may seem overwhelming at the outset, having a No-Action Letter will allow you the freedom to move forward while avoiding the stress of costly regulatory enforcement activity.

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*Justin B. Hosie is a Partner at Hudson Cook LLP, licensed to practice law in Florida and Tennessee. Erica A.N. Kramer is an Associate at Hudson Cook, LLP, licensed to practice law in Florida. You can contact Justin for more information at (423) 490-7560 or jhosie@hudco.com.

Earlier this week, DepositAccounts published a great post, “Are You Ready for Driverless Banking?” It’s a clever title I wish I’d thought of first. And importantly, it was framed a question. Because whatever you call it, the level of desired automation in banking, investing (hello, robo-advisers), and even insurance (Pay as you Drive), is a fundamental issue going forward.

Do consumers want control, or convenience. When it comes to money, most would answer “both.” Forced to choose one or the other, they’d invariably say “control” because it’s the right thing to say/believe. But if you are an observer of common behavior, you’ll have noticed consumers almost always head towards “convenience” at the expense of even basic control (see examples below).

It’s a paradox that drives financial product managers and marketers crazy. How do you build a UX for consumers who say one thing, but do another? Welcome to the world of dieting and gym memberships. You embrace the paradox, dare say you actually profit from it, by providing services customers say they want. Then you get out of the way and let them, or not. Just don’t rub it in their faces when they inevitably fail at their New Year’s resolution (again).

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Some examples:

Security
What consumers say: I want the very best security in the world.
Reality: Just show me the money, I’ll worry about security another time.
Solution: Provide simple-to-use deposit-fraud insurance for peace of mind.
Fee opportunity? Absolutely.

Transaction tracking
What consumers say: I want to view and consider every transaction.
Reality: Would rather watch a puppy video on Youtube
Solution: Stream transactions to users, prioritized by size/type (e.g., Google priority mail)
Fee opportunity? Maybe, but only if bundled with other value-adds

Budgeting
What consumers say: I want to stay within my monthly budget, no exceptions
Reality: I can make it up next week/month/year
Solution: Show their real-time standings against historical norms and known upcoming expenses (e.g., Simple’s Safe to Spend)
Fee opportunity: Maybe, but only if bundled with other value-adds

Shopping (for financial services)
What consumers say: I want to look around for the very best rate/price/terms/service
Reality: I’m good
Solution: For major “considered” services (e.g., mortgage, car insurance) show how your prices compare to others. Yes, you may make it easier to find your competitor, but most customers that go elsewhere would have anyway. More likely, if you are “close enough” price-wise, you’ll get the business, as long as it is tangibly easier to buy through your UI.

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Image licensed from 123rf.com

The deadline for applications to join the Spring 2016 cohort of the Queen City FinTech Accelerator Program is this Wednesday, 6 January.

QCFinTech is based in Charlotte, North Carolina, a major U.S. financial services hub that provides access to professional mentors from institutions ranging from Bank of America to Wells Fargo. The accelerator program runs for 12 months with an on-site, “intensive acceleration” beginning on 14 March and ending with a Demo Day event on 1 June. Finovate Best of Show award winner Dyme is among the program’s alums.

In a statement, QCFintech said their accelerator program was an opportunity to help different kinds of fintech companies bring their innovations to market. “While our program does not focus on one aspect of fintech,” the statement noted, “our mentors and expertise tend to have core expertise in payments, cyber security, retail and consumer banking.”

For just the fourth time this year, weekly fintech fundings fell below the $100-million mark with 15 companies raising a total of $51 million.

The second-largest round of the week ($4 million), went to Finovate veteran Dana Bowers’ latest startup, Venminder. The Kentucky-based company has developed a vendor-management platform for banks and credit unions. Bowers is the founder of iPay Technologies, which demoed at the first Finovate in 2007, and was acquired by Jack Henry in 2010.

With just one holiday-shortened week remaining in the year, the total invested in private fintech companies YTD now stands at $18.8 billion.

Here are the deals by size from 19 Dec to 25 Dec 2015:

PokitDok
Person-to-person lender
Latest round: $35.1 million Series B
Total raised: $40.7 million
HQ: San Mateo, California
Tags: Enterprise, healthcare, payments, insurance, billing, API, developers
Source: Crunchbase

Venminder
Vendor management for financial services companies
Latest round: $4 million
Total raised: $6.3 million
HQ: Elizabethtown, Kentucky
Tags: Enterprise, risk management, compliance, operations
Source: Crunchbase

Prestiamoci
Person-to-person consumer lender
Latest round: $2.2 million Series
Total raised: $3.5 million
HQ: Milan, Italy
Tags: Consumer, lending, underwriting, sub-prime, loans, P2P, investing
Source: Crunchbase

Streami
Blockchain-based remittances
Latest round: $2 million Seed
Total raised: $2 million
HQ: Seoul, South Korea
Tags: Blockchain, bitcoin, cryptocurrency, payments, remittances
Source: Crunchbase

Snapcard
Bitcoin exchange
Latest round: $1.5 million
Total raised: $4.45 million
HQ: San Francisco, California
Tags: SMB, consumer, blockchain, cryptocurrency, payments, wallet, bitcoin
Source: Crunchbase

BTCS (aka Bitcoin Shop)
Blockchain technology
Latest round: $1.4 million Post-IPO equity
Total raised: $4.2 million
HQ: Troy, Michigan
Tags: Bitcoin, cryptocurrency, payments, blockchain
Source: Crunchbase

Sharesight
Investment portfolio management
Latest round: $1.35 million Seed
Total raised: $1.35 million
HQ: Wellington, Australia
Tags: Consumer, investing, trading, aggregation, wealth management
Source: Crunchbase

BorsadelCredito.it
Person-to-person small business lender
Latest round: $1.1 million
Total raised: $1.1 million
HQ: Milan, Italy
Tags: SME, lending, alt-credit, underwriting, sub-prime, loans, P2P, investing
Source: Crunchbase

Chronos Technologies
F0rex trading technology
Latest round: $1 million
Total raised: $1 million
HQ: Scottsdale, Arizona
Tags: Forex trading, investing, fx
Source: Crunchbase

Minkasu
Mobile and online payments
Latest round: $1 million Seed
Total raised: $1.75 million
HQ: Milpitas, California
Tags: Consumer, mobile wallet, security, payments
Source: Crunchbase

The PayPro
International payments
Latest round: $450,000 Seed
Total raised: $450,000
HQ: London, England, United Kingdom
Tags: SMB, payments, billpay, fx, international payments, billpay, remittances
Source: Crunchbase

Bee
Mobile bank/card
Latest round: Not disclosed
Total raised: $4.6 million
HQ: New York City, New York
Tags: Consumer, prepaid debit card, neo-bank, challenger bank, mobile, AXA (investor)
Source: Crunchbase

Depo
Escrow and renter-deposit management
Latest round: Not disclosed
Total raised: Unknown
HQ: Sweden
Tags: Payments, renting, escrow, deposits, homes
Source: Crunchbase

GoldBean
Helping consumers get started in investing
Latest round: Not disclosed
Total raised: Unknown
HQ: New York City, New York
Tags: Consumer, investing, personal finance, spending, PFM, AXA (investor)
Source: FT Partners

Payable
Contractor payables solution
Latest round: Not disclosed
Total raised: $2.1 million
HQ: Sunnyvale, California
Tags: SMB, payments, invoicing, billing, billpay, accounts payable, payroll
Source: FT Partners

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Image licensed from 123rf.com

Last week, 20 companies raised $175 million, including $25 million in debt. It was the sixth week in a row that the number of fintech fundings topped 20. And the dollar total has hit 9-figures ($100 mil) or more 12 weeks in a row now. Both of the streaks will likely stop during the holidays, but so far the sector has defied gravity for the past 12 to 18 months, so even December could surprise.

Chinese P2P lender Meili Jinrong led the pack with a massive $65 million A round. But the most surprising funding was the $42 million to the Atlanta-based alternative credit bureau, FactorTrust. Two Finovate alums added capital: Roostify which picked up $500,000 from Wells Fargo’s startup accelerator to further its mission to streamline the mortgage process for consumers and Figo, a German-based firm, which banked “7 figures” to expand its suite of banking APIs.

This week’s funding puts the 2015 year-to-date total to $16.0 billion, or $22 billion if you add the two October IPOs.

Here are the rounds by size from 31 Oct through 6 Nov 2015:

Meili Jinrong
P2P lending
Latest round: $65 million Series A
Total raised: $65 million
HQ: China
Tags: Consumer, lending, loans, peer-to-peer, investing
Source: FT Partners

FactorTrust
Alternative credit bureau
Latest round: $42 million
Total raised: $42 million
HQ: Atlanta, Georgia
Tags: Enterprise, underwriting, lending, risk management
Source: Crunchbase

Expansion Capital Group
Small business alt-lender
Latest round: $25 million Debt
Total raised: $37.1 million (includes $35 million debt)
HQ: Sioux Falls, South Dakota
Tags: SMB, financing, credit, loans, commercial lending
Source: Crunchbase

Invoice2Go
Invoicing solution
Latest round: $15 million Series C
Total raised: $50 million
HQ: Redwood City, California
Tags: SMB, invoicing, accounts receivables, billing, accounting
Source: Crunchbase

Mercatus
Energy-project financing
Latest round: $6.7 million
Total raised: $10.4 million
HQ: San Jose, California
Tags: Enterprise, SMB, investing
Source: Crunchbase

inov8
Mobile payments technology
Latest round: $5.4 million
Total raised: $5.4 million
HQ: Lahore, Pakistan
Tags: Consumer, mobile, payments
Source: FT Partners

POKKT
Rewards and alt-currency platform
Latest round: $5 million Series B
Total raised: $7.5 million
HQ: Mumbai, India
Tags: Consumer, payments, rewards, gaming
Source: Crunchbase

Compeon
Finance portal for small businesses
Latest round: $2.74 million
Total raised: $2.74 million
HQ: Emsdetten, Germany
Tags: SMB, lead gen, financing, commercial lending, price comparison
Source: Crunchbase

Eagle Alpha
Alternative data platform for asset managers
Latest round: $1.8 million Seed
Total raised: $6.3 million
HQ: Dublin, Ireland
Tags: Advisers, trading, investing, wealth management
Source: Crunchbase

Ingage
Investor relations platform
Latest round: $1.7 million
Total raised: $4.6 million
HQ: London, England, United Kingdom
Tags: Enterprise, investing, compliance, information management
Source: FT Partners

BTL Group
Blockchain technology
Latest round: $1.5 million
Total raised: Unknown
HQ: Vancouver, British Columbia, Canada
Tags: Blockchain, bitcoin, cryptocurrency, enterprise
Source: FT Partners

Change Labs
Personal finance tracking
Latest round: $800,000
Total raised: $800,000
HQ: Caesarea, Israel
Tags: Consumer, PFM, financial management, messaging, savings
Source: Crunchbase

Roostify
Home buying application
Latest round: $500,000
Total raised: Unknown
HQ: San Francisco, California
Tags: Consumer, Wells Fargo (investor), Finovate alum
Source: FT Partners

Call Levels
Financial markets monitoring and notifications
Latest round: $500,000
Total raised: $500,000
HQ: Singapore
Tags: Consumer, investing, trading, securities
Source: Crunchbase

TawiPay
International remittances price-comparison site
Latest round: $400,000 Seed
Total raised: $500,000
HQ: Lausanne, Switzerland
Tags: Consumer, payments, remittances, lead gen, price comparison
Source: Crunchbase

ZapChain
Bitcoin trading community
Latest round: $350,000
Total raised: $350,000
Tags: Consumer, investing, trader, cryptocurrency, social network
Source: Crunchbase

Loanbaba.com
Consumer loan marketplace
Latest round: $320,000 Seed
Total raised: $320,000
HQ: Mumbai, India
Tags: Consumer, lending, lead gen, loans, small business loans, mortgage
Source: Crunchbase

Wirex Limited
Bitcoin debit card (e-coin)
Latest round: $187,000 Crowdfunding
Total raised: $187,000
HQ: London, England, United Kingdom
Tags: Consumer, debit card, payments, cryptocurrency
Source: Crunchbase

Figo (formerly known as LeanBanking)
Banking APIs
Latest round: “7 figures” (exact amount undisclosed)
Total raised (previously): $780,000
HQ: Hamburg, Germany
Tags: Consumer, API, developers, Finovate alum
Source: Finovate

Scout Finance
Next-generation financial research
Latest round: Undisclosed
Total raised: $1.7 million (prior to latest round)
HQ: New York City, New York
Tags: Consumer, investing, information, trading
Source: Crunchbase