Rate Cuts May Slow; Card Delinquencies Rise; Synapse Banks Face Class Actions

Rate cuts may slow, Fed comments suggest. Credit card delinquencies hit 4%. Synapse partner banks face potential class actions. Lumin and Public announce funding rounds. Coinbase now supports Apple Pay. FNBO shuts down digital-only bank Milli. Trump Jr. joins PublicSquare board.

Keep an eye on your inboxes: we will be sending out our Q3 Consumer Lending Review soon. In the meantime, you can go here for trends we uncovered back in Q2.

New here? Subscribe to get the latest from Cross River. For even more updates, follow us on LinkedIn.

Rate Cuts May Slow, Fed Comments Suggest

Demand for workers appears to be stabilizing, the most recent JOLTS data suggests. Job openings increased, while layoffs eased, October data show. Available positions increased from a revised 7.37Mn in September to 7.74Mn in October. Fed Chair Powell, meanwhile, said that the economic situation now looks better than when the Fed began cutting rates in September, giving the central bank breathing room to move more slowly in lowering rates.

St. Louis Fed President Musalem said last week that he wants to “maintain policy optionality” going into this month’s meeting, arguing that the risks of cutting too quickly now outweigh the risk of easing too little. Interest rate futures markets currently indicate investors are expecting a 25bps cut at the Fed’s December meeting, followed by a slower pace of cuts. Still, consumers are showing some signs of stress, with credit card delinquencies exceeding 4%, the highest level since 2010.

Synapse Banks Face Potential Class Action Suits

The Synapse bankruptcy case continues to drag on, but, for depositors who have yet to see all of their funds returned, hopes appear to be dimming. Last month, Evolve Bank & Trust, one of Synapse’s key bank partners, informed impacted end users of the results of its reconciliation efforts, which, Evolve says, calculated users’ aggregate Synapse “ecosystem” balance and the portion, if any, that Evolve held. But many depositors were dismayed to discover Evolve claimed to hold only a small portion of what they are owed or nothing at all.

With progress in the bankruptcy case seeming to hit a dead end, various stakeholders are pursuing other litigation. Yotta, a neobank that worked with Evolve via Synapse, has filed suit against the bank. And several potential class action cases have been filed on behalf of impacted end users against Evolve and its parent company, Evolve Bancorp, as well as three of the other key banks involved, AMG National Trust, Lineage, and American. The potential class action suits are seeking restitution and equitable relief, disgorgement of funds, an injunction to stop the defendants’ alleged harmful business practices, economic and compensatory damages, attorneys’ fees and legal expenses, pre- and post-judgment interest and any additional relief the court deems appropriate.

Lumin Raises $160Mn

Digital banking provider Lumin announced it has raised $160Mn in additional funding. Lumin has developed and offers a cloud-based platform for retail and business banking customers. The latest funding round was led by NewView Capital, Light Street Capital, and Partners Group. The company plans to use the incremental funding to accelerate its growth initiatives, including “enhancing innovation” and developing additional capabilities and features for financial institutions and their customers. Of the funding round, Kevin Sullivan, partner at Light Street Capital, said, “Lumin Digital’s innovative platform, exceptional leadership, and commitment to delivering outstanding value to clients and their members are redefining the digital banking experience and have set the company apart as a true industry leader.”

Public Announces Series D-2 Funding

Neobroker Public has raised a fresh $135Mn in funding, the company announced last week. The D-2 round, which comes four years after its last fundraise, is composed of $105Mn in equity and $30Mn in debt. The financing was led by venture firm Accel. Public, which started out as a social stock trading app, has aggressively leaned into AI. The company believes AI is better positioned to provide many of the benefits that users have previously leveraged its social capabilities for. More than 90% of Public members use its AI research agent, dubbed Alpha. As part of the funding announcement, Public revealed that its “core brokerage business” is profitable and boasts “over 10 significant revenue streams.”

Coinbase Now Supports Apple Pay

Coinbase users can now quickly and seamlessly pay for their crypto purchases with Apple Pay, the company announced last week. The company has integrated the payment method into its Coinbase Onramp tool, which facilitates fiat-to-crypto purchases. “Coinbase Onramp takes the hassle out of fiat-to-crypto conversions with lightweight KYC for eligible purchases, free USD on and offramping, and access to the most popular payment methods. With Apple Pay, getting onchain takes only seconds,” according to the company’s announcement. The addition of Apple Pay is the latest feature roll out. In recent months, Coinbase began letting users in most regions earn “rewards” on USDC held onchain and, in October, partnered with Visa Direct to enable users to deposit funds via eligible Visa debit cards.

FNBO Shuts Down Milli

First National Bank of Omaha, popularly known as FNBO, is shutting down its standalone mobile banking brand, Milli. The digital-only banking brand offered a spending account with physical and virtual debit cards and savings accounts with features like round-ups, auto-savings, and savings “jars” for specific financial goals. Although FNBO is shutting down Milli, the company will continue to operate its FNBO Direct online bank, which has been in operation since 2006. A FNBO spokesperson commented on the shutdown, “Our decision to discontinue further investment into Milli will allow us to direct our innovation resources toward other areas of our business that we look forward to growing and strengthening to best serve our customers.”

Trump Jr. Joins PublicSquare Board

Donald Trump, Jr., has joined the board of directors of PSQ Holdings, the parent company of PublicSquare. The company, founded in 2021, aims to allow consumers to “shop their values” by connecting Christian shoppers with Christian businesses. PSQ began trading publicly after SPAC’ing in 2023 through a reverse-merger Colombier Acquisition Corp. In addition to supporting religious values, PSQ has aligned itself with the firearm industry via its all-stock acquisition of Credova, which offers buy now, pay later financing for guns.