What Happened to the OCC's Chief Fintech Officer?
CFPB Takes Aim at Apple & Google's Control Over Mobile Payments, Q2 Banking Profile Highlights, FT Partners' August Summary, Fed's Fintech Conference
Get the latest developments on this story in a post that published November 24th, 2023, here: OCC Ex-Fintech Chief's Fake Resume, DUIs Raise Fresh Questions
Hey all, Jason here.
After a couple days in Philadelphia, I’m putting the finishing touches on this week’s newsletter from New York. I’ll be here for the next few days before heading back to the Netherlands on Thursday.
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Brief Thoughts On The Fed’s Fintech Conference
I had the opportunity to attend the Philadelphia Federal Reserve’s Seventh Annual Fintech conference last week.
I attend a lot of these kinds of events, and, I have to say, this event featured some of the highest-caliber speakers (and attendees) of any I’ve gone to.
Panelists weren’t afraid to express strong points of view, even if somewhat controversial — a refreshing change of pace vs. the polished, PR-approved talking points that are typical at some events.
Something that struck me was the explicitly political nature of some speakers’ remarks — something that most in fintech and banking tend to avoid.
Whether or not I agreed with any given policy position, it was a starkly different dynamic. Banking, fintech, crypto, even “money” itself are often inherently political — it was highly enjoyable to see stakeholders and policymakers tackling some of the tough questions about how the system does, or should, work.
What Happened to the OCC's Chief Fintech Officer?
If “personnel is policy,” I’m not quite sure what to make of the current situation at the OCC’s recently announced Office of Financial Technology.
The office, officially announced last October, was intended to build on and incorporate the OCC’s existing Office of Innovation. At the time it was announced, acting Comptroller Hsu said:
“Financial technology is changing rapidly and bank-fintech partnerships are likely to continue growing in number and complexity. To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape. The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission.”
In March of this year, the OCC officially appointed someone to head the new office — Prashant Bhardwaj — who would hold the title of Chief Financial Technology Officer and Deputy Comptroller, reporting in to the Senior Deputy Comptroller for Bank Supervision Policy.
The statement announcing Bhardwaj’s appointment describes his background as follows:
Mr. Bhardwaj joins the agency after nearly 30 years of experience serving in a variety of roles across the financial sector.
He holds a master's degree in accounting from University of Cincinnati and a master's degree in business administration from the International Management Institute Universiade de Brussels.
And while Bhardwaj appears to have attended at least a couple of events on behalf of the agency after assuming his role as Chief Financial Technology Officer, at some point between April and now, Bhardwaj quietly disappeared from his role at the OCC.
The Office of Financial Technology is now headed by Miriam Bazan, a long-time OCC bank examiner.
I reached out to the OCC to ask what happened to Bhardwaj, and a spokesperson for the national bank regulator declined to comment.
But digging in to Bhardwaj’s background — or attempting to, anyway — raised more questions than answers.
For an industry veteran with “nearly 30 years of experience,” there’s no identifiable trace of him online.
His background mentioned in the OCC release didn’t specify any prior employers, and, when asked for additional detail, the OCC spokesperson declined to comment.
The release did specify two education credentials: a master’s degree in accounting, from the University of Cincinnati, and an MBA from the International Management Institute Universiade de Brussels.
The University of Cincinnati was unable to verify if Bhardwaj attended and completed an accounting master’s by the time of publication.
Bhardwaj’s MBA from “the International Management Institute Universiade de Brussels” seems to be a more convoluted tale.
For starters, there is no school by that name. It’s not clear if “Universiade” was a typo, but it isn’t even a word.
If it was a typo, presumably the intention was “Universidade” de Brussels — but even that is nonsensical — “universidade” is Portuguese; the languages spoken in Belgium are French and Flemish.
There is, however, a school by the name of the “International Management Institute” in Brussels:
The school, though, is an unaccredited institution that had to cease claiming to award bachelor’s or master’s degrees in 2009 and appears to be a degree mill.
The institution itself appears to be affiliated with the Indian Institute of Planning and Management — also an unaccredited educational entity, which was shut down by the Indian government for fraudulent practices and false advertising.
An Indian court found that the Brussels-based International Management Institute was setup by the same family behind the India Institute of Planing and Management in order to lend false credibility to the Indian school and to lure students hoping to acquire educational credentials aboard.
The Delhi High Court described the scheme as a “maze created by IIPM to entrap students to enlist with it in the hope of acquiring a Qualification abroad.”
It’s unclear if The International Management Institute continues to exist and function.
In response to an email asking to verify if Bhardwaj attended and obtained a master’s degree in business administration, as the OCC release stated, I received a response that, after paying an up-front fee of €350 via bank transfer, they would complete the verification inquiry (I declined to do so.)
The address listed for the school — Grenstraat 7, in Brussels, appears to be a serviced rental office space, rather than a university of any kind:
All of which begs the question — who is Prashant Bhardwaj, and how did he get appointed as the OCC’s Chief Financial Technology Officer?
CFPB’s Chopra Highlights “Big Tech’s” Control Over Mobile Payments
At last week’s Philadelphia Fed fintech conference, CFPB Director Rohit Chopra used his speech to highlight the Bureau’s just-released report on mobile device operating systems and tap-to-pay practices.
The report and Chopra’s remarks are the latest salvo in the Bureau’s ongoing scrutiny of “big tech” — firms like Apple, Google, Meta, and Amazon — and their increasing push into financial services.
The report emphasizes Google and especially Apple’s control over the mobile payments ecosystem: Apple controls the hardware, prohibits third parties from accessing near-field communications (NFC) capabilities, controls the operating system, and functionally acts as a regulator for what third-party applications can be added to devices through its App Store.
And, unlike Google, Apple charges card issuers for transactions handled through Apple Pay — $0.005 for debit transactions and 0.15% for credit cards.
Google exercises comparatively less unilateral control. While Google does manufacture its own handsets, third parties actually comprise a larger share of Android-powered devices. Unlike Apple, Google/Android devices do not currently restrict third parties from leveraging NFC capabilities. The company also does not charge card issuers for Google Pay transactions.
While it seems a pretty straightforward case to argue that Apple’s practices especially are anti-competitive, I can’t help but ask myself: is this really the most pressing issue the CFPB should be focusing on?
FDIC Q2 Banking Profile
Last week, the FDIC released its Q2 quarterly banking profile. While the entire report and data set are well-worth reviewing, a handful of metrics stuck out to me:
1. Declining Net Income
Overall, net income dropped by $9 billion vs. last quarter — though, excluding non-recurring accounting gains on failed bank acquisitions in the first and second quarters, net income was roughly flat:
2. Net Interest Margin Down Slightly
After seeing a steep rise over the course of 2022, net interest margins have leveled off and declined slightly quarter over quarter as banks’ cost of funds rise as they battle for deposits:
3. Banks Continue To Rack Up Unrealized Losses
If you thought that, with SVB, Signature, and First Republic in the rearview mirror, the pain of declining asset prices was safely behind us, think again. As rates have continued increasing, banks are still notching significant unrealized losses in their securities portfolios:
4. Declining Deposits
Unsurprisingly, with attractive rates on offer for money market funds and short-term treasuries, overall deposit levels in the banking system continue to decline, though not as significantly as in the first quarter:
FT Partners’ Monthly: August Saw $3.2 Billion In Funding Across 191 Deals
Fintech funding continues to chug along — August saw 191 deals, with a total of $3.2 billion invested, per FT Partners’ monthly analysis.
While more pain still seems likely for mid-stage fintechs that are struggling to find a route to profitability, earlier-stage companies that have identified market opportunities are still able to get funded:
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Other Good Reads
Plaid’s Perfect Timing (Fintech Takes)
Is Payments A Race To The Bottom? (Fintech Brainfood)
Is The Fed Financing The FDIC? (Without Warning)
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