Industry News: August 2024
As the summer winds down, significant events in finance have shifted market dynamics and influenced the fintech industry for investors across the globe. Here’s your roundup of the must-know August 2024 fintech news.
Large Canadian Bank Prepares to Pay Up
What happened: Canada-based Toronto-Dominion Bank (which has roughly 10 million clients and 1,200 branches located in the U.S.) is selling Schwab shares to round up $2.6 billion for money laundering-related fines following a U.S. Justice Department investigation.
Why it matters: While a strong compliance program can be costly and time-consuming for financial institutions, it’s essential for investor protections. TD’s hefty fines underscore the increasing regulatory scrutiny regarding anti-money laundering (AML) here in the U.S., and as the bank sells Schwab shares to offset those fines, it’s a good reminder to firms to closely review their AML compliance policies and procedures.
Bitcoin Buyers Take Advantage of “Discounted” Prices
What happened: Bitcoin value dropped 28% in early August – but many institutional investors took the opportunity to buy into the dip.
Why it matters: The fact that institutional investors bought into the Bitcoin dip shows confidence in the long-term potential of cryptocurrencies (despite its high volatility). For retail investors, this signals that large players still believe in Bitcoin’s staying power. However, it also highlights the importance of being strategic during market downturns, balancing potential opportunities against risks.
Edward Jones Expands Both Advisor Software and Customer Services
What happened: By the end of 2025, Edward Jones customers can expect to have more credit card and checking account options, while advisors will gain access to Salesforce Financial Services Cloud and Envestnet MoneyGuide software.
Why it matters: Edward Jones’ software expansion is a signal to investors that traditional financial institutions are ramping up efforts to compete with fintech disruptors through more holistic client experiences fueled by tech automation. As for the new credit card and checking account options, they will be co-branded with their partner company, US Bank, and are expected to roll out by the end of next year – likely in an effort to attract new and retain existing customers.
G Squared Rounds Up Over $1 Billion
What happened: G Squared, a venture capital firm founded in 2011, takes a non-traditional approach through secondary market investments in startups.
Why it matters: G Squared’s model is based on the idea that investors can buy shares at a significant discount through start-up employees and investors, paying an estimated 30% less than the company’s value. The new fund (the sixth of its kind from G Squared) has raised $1.1 billion as of August 2024 and will reportedly hold about $4 billion in AUM – which may point toward increased activity in venture markets with a focus on established startups.
Corporate Crypto Fuels the 2024 Presidential Election
What happened: According to a recent report from Public Citizen, crypto companies are heavily investing in the 2024 presidential race – accounting for “nearly half of all the corporate money flowing into the election.”
Why it matters: Digital currency companies, including Coinbase and Ripple (both of which “have been engaged in legal battles with the Securities and Exchange Commission”), have contributed around $119 million to the 2024 election. Their involvement highlights the growing political influence of the digital asset sector. For investors, this could have long-term implications for regulatory environments surrounding cryptocurrencies (which are still in their early stages, relatively speaking).
Ikea Supports Your Thrifting Habit
What happened: Similar to eBay or Facebook Marketplace, Ikea Preowned is a new platform for individuals to buy and sell used furniture directly from one another.
Why it matters: For investors, IKEA’s entry into the secondhand marketplace signals a growing trend in sustainable consumerism and circular economies. As more companies adapt to environmental, social, and governance (ESG) standards, the ability to capitalize on resale markets could become a key revenue driver, appealing to socially-conscious customers and potentially offering long-term growth.
Rate Cuts Are Arriving Soon
What happened: The Federal Reserve Chair, Jerome Powell, says “the time has come” for a cut to its key policy rate.
Why it matters: Lower interest rates typically lead to lower borrowing costs, which can stimulate economic growth and potentially boost equity markets. However, they may also compress yields on fixed-income investments, pushing investors to seek higher returns in riskier assets. While we don’t yet have an exact timeline for the cut to occur (or what number it will land on), it’s a good idea for both advisors and investors to start thinking about how this upcoming switch could impact their financial plans.