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Happy Monday, Fintech Takers! There’s gotta be a German word for the feeling of relief and happiness that occurs after your sports team avoids losing a game that you had, at some point, convinced yourself that they should win. It’s a distinct feeling; more relief than happiness, as if you just narrowly avoided a serious injury. I hope you had a good weekend and are ready for a productive week. I have the week off from travel, but I am gearing up to co-host our Agentic Readiness Summit in Montana next week. And I’ll be in D.C. for the AFC Policy Summit later in November, followed (that same week) by Fintech NerdCon (where I am hosting a dinner, which we still have a few open seats for … email me if you’re interested in joining!) Should be a good (if slightly exhausting) way to close out the year! - Alex Was this email forwarded to you? Sponsored by C&R Software 7 of the top 15 U.S. banks use C&R Software for their collections AI.  Peacock by Ohara Koson. 3 FINTECH NEWS STORIES#1: The SOFIE TestWhat happened?SoFi launched a new product:
So what?The first thing to understand with this product is that it’s not meant for SoFi’s existing retail members. Those members already have access to SoFi’s non-tokenized savings account and they can, whenever they want, convert those savings into SoFiUSD in the SoFi app. SoFi Earn isn’t meant for TradFi members. It’s meant for crypto-native users who are not yet SoFi members. And the pitch to those prospective members, very explicitly, is yield; the thing OCC just affirmed in its final rules implementing the GENIUS Act that payment stablecoins are not allowed to offer. Here’s SoFi CEO Anthony Noto:
In other words, SoFi Earn is the weaponized version of banks’ original stablecoin fear: That yield + interoperability is enough to shift massive amounts of deposits from incumbents to new market entrants. It’s just that, in this case, crypto brokerages and wallet providers are the incumbents — holding customers’ funds hostage at 0% APY — and SoFi is the disruptor coming in and saying, “It’s unfair and wrong that these people aren’t getting paid for their deposits!”1 And SoFi is really going for it here. The proffered APY for SOFIE (4.40%) is much higher than what SoFi offers its TradFi members (3.30% with direct deposit), and competitive with what SoFi offers to SoFi Plus members with a savings account (4.70% on balances up to $20,000). The mechanics are a bit funky. From what I can tell, you have to open up a SoFi account first, fund it, and then either convert those non-tokenized deposits into SOFIE or buy SoFiUSD and then convert that into SOFIE. And, when you want to move money from SOFIE out onto the blockchain, you need to first convert it into SoFiUSD. Maybe not ideal user experiences for the crypto power users that SoFi is targeting with SOFIE, but certainly not prohibitive. The real question is: Will this crypto-focused member acquisition strategy by SoFi actually work? If banks were correct in their fear of yield-bearing payment stablecoins, it should. SoFi is paying above-market rates to users who aren’t getting risk-free yield on their stablecoins today. If that, plus a baseline level of convenience and interoperability is all it takes to steal away deposits, then SoFi should be swimming in excess deposits within a couple of quarters. Personally, I tend to doubt that will happen. As I argued back when GENIUS and Clarity were being debated, the fears over yield as a customer acquisition strategy are overblown. People pick their financial services providers for a variety of reasons and many of those reasons are, often, more important to them than yield. Plus, crypto companies have already found a number of clever ways around the GENIUS yield prohibition and they will continue to, which should keep the most valuable, yield-hungry users where they are. All in all, I’d bet that SoFi’s SOFIE strategy won’t yield much. But I’m glad we get to see the underlying theory put to the test. #2: Ramp’s Newest InvestmentsWhat happened?Ramp acquired a company called Vesto:
And it applied for a national trust bank charter:
So what?Let’s take these one at a time. On the Vesto acquisition, I think the simplest explanation is that Ramp is becoming a full-service “money in” business. As I wrote about last month, Ramp got its start on the “money out” side of B2B finance, helping companies manage their expenses (corporate cards, travel, procurement, accounts payable, etc.) However, more recently, the company has been building out the “money in” side of the business, launching business banking, investing, and (most recently) accounts receivable. Vesto helps pull those pieces together, creating a unified way for businesses to see where all of their cash sits, and (presumably) giving them various tools for optimizing their assets while keeping enough cash on hand to pay their expenses. This is a capability that, I would imagine, is more important to larger companies, which matches with Ramp’s trajectory as it both moves up market and grows with its existing customers. I’m sure Ramp could have built Vesto internally, but, honestly, why bother if you like the product and the team? You have the money. On the national trust bank charter, I’m sure it will be nice for Ramp to be able to custody its own assets rather than having to rely on custody partners for its investment account and its growing stablecoin business.2 However, I think the real appeal of a national trust bank charter for Ramp is: A.) It’s available right now and likely won’t be for that much longer.3 B.) It does not require Ramp to become a bank holding company. C.) It creates a path for Ramp to get direct access to Fed payment rails via a master account.4 Put simply, it gives Ramp a lot of optionality and potentially lets a company that is entirely focused on shipping products as fast as it can get closer to the metal.5 #3: Tipping in Fintech is Complete BullshitWhat happened?EarnIn sued Maryland’s Attorney General and Commissioner of Financial Regulation:
So what?As Jason Mikula detailed in yesterday’s edition of Fintech Business Weekly, Maryland has had an interesting history with the earned wage access (EWA) industry, passing an initial law in 2025 to regulate the industry (including requiring tips to be completely voluntary) and then passing a new one in April of this year that (among other things) banned tipping in EWA altogether. It is this second statute that EarnIn is suing Maryland over. As I remind y’all frequently, I am not a lawyer. I don’t have any meaningful legal analysis to offer you on the arguments that EarnIn is making in this lawsuit. It’s certainly creative to use the First Amendment to the U.S. Constitution to argue in favor of your pricing model, although I’d be a bit surprised if the courts bought EarnIn’s argument for strict scrutiny rather than just considering the request for tips to be normal commercial speech.6 But again, not a lawyer. And, to be honest, I don’t really care about the legal argument here. I think one of our great failings as an industry is our tendency to ask, “Are we allowed to do this?” rather than, “Is this the right thing to do?” When it comes to the practice of fintech companies asking their customers for tips, the answer to that second question is “obviously not.” You know why? Because it’s embarrassing. That’s why. It’s embarrassing for EarnIn to argue that its First Amendment rights and the First Amendment rights of its customers are being violated because Maryland passed a law barring it from asking its customers for tips. EarnIn is not the ACLU. It’s not a non-profit struggling to get grant money. And unlike restaurants and taxicab services, it’s not a business that delivers its services through human employees, which is the normal criteria for asking for tips! EarnIn is a privately-held, for-profit technology company that has raised $190M in equity capital from name-brand venture capital firms like Andreessen Horowitz, Ribbit, and Coatue. It should be embarrassed to ask its customers for tips. And you know what else? Tipping is a bad business model! Just look at Dave. For years it ran the same optional-tip playbook EarnIn is now suing to protect — an “add a tip” slider on its ExtraCash advances and members able to pay as little as $0. Then, in late 2024, with the FTC breathing down its neck over exactly that model, Dave scrapped it. No more tips and no more optional express fees, just a flat 5% fee, $5 minimum, $15 cap. And guess what? It worked out great. In its first full year on the mandatory fee, Dave’s revenue grew 60% to $554M, ARPU jumped 36%, adjusted EBITDA more than doubled to $227M at a 41% margin, and net income more than tripled. Revenue growth hit its fastest pace since 2021. Tips weren’t funding the business. They were suppressing it, by leaving money on the table and making the revenue too variable to borrow against. Once Dave killed it, it could securitize receivables and start raising credit limits. And did Dave’s customers mind? No! Management reported “positive member feedback” during early testing, said the clean fee improved transparency for members, and — crucially — saw no adverse selection and no hit to conversion or retention when it made the fee mandatory. In fact, credit performance actually hit all-time lows. Turns out customers would rather be told the price than be guilted into guessing it. Sponsored by BILL 86% of SMB leaders use AI in finance, but only 19% trust AI “completely.” If you could take another tedious task off your to do list, what would it be? 2 READING RECOMMENDATIONS#1: SoFi's Tokenized Deposit Strategy Doesn't Need Tokenization (by Ron Shevlin, Fintech Snarktank) 📚Good stuff from Ron on SOFIE and how banks should be thinking about tokenized deposits. #2: NBA League Pass Rankings (by Zach Lowe, The Lowe Post) 📚Not a fintech content recommendation. Apologies. But when my favorite sports writer (and one of my favorite writers overall) comes back to writing after a long, podcast-only hiatus, I’m going to recommend him. The League Pass Rankings, in particular, are a treasure. *Bonus: How Federal Benchmarking Exposed Real Separation in Identity Verification 📚 (by Microblink)You have to appreciate a blind test in a market where every vendor’s accuracy claims look the same. DHS tested 7 anonymized document verification systems against thousands of real and fake IDs. Microblink was the only one to meet its “high performing” thresholds across every category. Here's what the results reveal, and what buyers should be asking. *This rec is brought to you by one of our fantastic brand partners. 1 QUESTION FROM FINITYThere are a TON of interesting questions being asked in Finity (our digital community for fintech and banking nerds). I’ll share one question, sourced from the community, each week. However, if you’d like to join the conversation, please apply to join! Do I have to read the Anthropic S-1? As someone who covers fintech in 2026, am I obligated to read it?If you have any thoughts on this question, reply to this email or DM me in Finity! Thanks for the read! Let me know what you thought by replying back to this email. — Alex Footnotes 1.The irony here is amazing. Banks argue that stablecoins can’t pay yield because it will put banks at a competitive disadvantage and lead to deposit flight. Then, immediately after winning that fight, a bank comes out and says, “Gee, it’s so crazy how stablecoin holders don’t get paid any interest. I am shocked by this! Let’s build a product to help them out!” 2. Quick! Someone check Kalshi and tell me what the odds are on Ramp launching its own branded stablecoin in the next 12 months. 3.That sound you hear is the ICBA screaming into the void. 4.This path, as you know, is winding … and dark … and populated by werewolves and vampires. Reaching the end of it is far from certain, but it’s nice to have the optionality. 5.Getting as close to the metal with as few abstractions in your way as possible is exactly why Ramp works with Increase (which also just became a bank). I’m guessing Increase isn’t thrilled about this news, though there’s plenty that Ramp will still need to get from its bank partners given the restrictions imposed by a national trust bank charter. 6.Earnin’s speaker discrimination argument (why is EWA, among all industries, being singled out for asking for tips?) seems stronger. Especially when paired with the fact that Maryland just passed a different law with more tailored restrictions for EWA that allowed tipping … and they didn’t give that law time to show any results before they passed the 2026 law. | ||||||||
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