Traditional banks are losing their grip on industry growth, according to a new report from Boston Consulting Group (BCG). The global banking industry has grown at a compound annual growth rate (CAGR) of 4% over the past five years, but traditional banks are ceding the most valuable ground to fintechs, digital attacker banks, private credit funds, and nonbank market makers. Incumbent banks have relied on balance-sheet-driven net interest income to contribute roughly 85% of the growth. Yet they struggle to generate capital-light noninterest income: while it grew by 1.8% in absolute terms, the relative amount generated per asset decreased by 18%. The report reveals that these shifts pose a structural challenge to traditional banks and calls for bold transformation and a rethinking of the relationships that link banks, regulators, and wider society. Looking at leading banks, the report notes three patterns that the market rewards: scale (not size), specifically in terms of domestic market leadership; the ability to generate a superior share of fee income; and market-leading productivity. The report also highlights four strategic approaches that today’s banking leaders pursue: front-to-back digitization; customer centricity; focused business models; and M&A champions. Banks can take more than one of these approaches, but all require strong digital capabilities. “Banks need to look boldly at their business portfolio and make hard calls to focus on fewer areas where they can win,” said Andreas Biffar, a BCG managing director and partner and a coauthor of the report. “Simplification of products and processes with comprehensive front-to-back digitization is a nonnegotiable element in the current context.” In addition, successful strategic implementation of AI could be a game changer, although many banks still struggle on this front. According to the report, banks need to adopt a vigorous and focused approach to AI implementation. If AI has not yet delivered for all banks, that may be due more to challenges in scaling and lack of holistic adoption by employees and customers than to issues with the technology. As agentic AI and machine voice emerge as even more powerful productivity levers, winners will take effective action to incorporate them. Nevertheless, AI alone may not be sufficient. Much of the potential value may be captured by nonbank players, which are currently better positioned to benefit from its applications.
GridCARE reduces data centers’ time-to-power from 5-7 years to just 6-12 months by leveraging advanced generative AI-based analysis to find pockets with geographic and temporal capacity on the existing grid to enable faster deployment of GPUs and CPUs
GridCARE, a new company powering the AI revolution, emerged from stealth today. The company has closed a highly oversubscribed $13.5 million Seed financing round led by Xora, a deep technology venture capital firm backed by Temasek. GridCARE works directly with hyperscalers and some of the biggest AI data center developers to accelerate time-to-power for infrastructure deployment, both for upgrading existing facilities and identifying new sites with immediate power availability for gigascale AI clusters. By leveraging advanced generative AI-based analysis to find pockets with geographic and temporal capacity on the existing grid, GridCARE reduces data centers’ time-to-power from 5-7 years to just 6-12 months, allowing AI companies to deploy GPUs and CPUs faster. As the one-stop power partner for data center developers, GridCARE eliminates the complexity of navigating thousands of different utility companies so developers can focus on innovation rather than power acquisition. GridCARE is also actively partnering with utilities, such as Portland General Electric and Pacific Gas & Electric, who view better utilization of their existing grid assets as a way to increase revenues and bring the electricity cost down for all their customers. Additionally, this collaboration stimulates local economies with billions of dollars of new investment and high-paying job opportunities. “GridCARE is solving one of the biggest bottlenecks to AI data centers today — access to scalable, reliable power. Their differentiated, execution-focused approach enables power at speed and at scale,” said Peter Lim, Partner at Xora. “Power is the critical limiter to billions of dollars in AI infrastructure,” said Peter Freed, Partner at Near Horizon Group and former Director of Energy Strategy at Meta. “GridCARE uncovers previously invisible grid capacity, opening a new fast track to power and enabling sophisticated power-first AI data center development.”
Vibe coding: Superblocks AI agent addresses security and privacy risks by turning natural language prompts into secure, production-grade applications written in React, a JavaScript library optimized for building any user interfaces
DayZero Software Inc., a maker of secure software development tools that does business as Superblocks, has raised $23 million in a Series A venture capital round extension, bringing its total funding to $60 million. The company is addressing a problem caused by generative artificial intelligence: vibe coding. It involves using AI tools to generate software quickly based on natural language prompts, often without a deep understanding of the underlying code. While great for rapid prototyping, vibe coding carries the risk of errors, security holes and inadvertent disclosure of proprietary information. Superblocks’ answer is Clark, an AI agent that turns natural language prompts into secure, production-grade applications written in React, a JavaScript library optimized for building user interfaces that can also support production-grade applications. “React is the largest front-end framework in the world so you can build pretty much any user interface with it, and most of the modern web is on it,” Superbocks co-founder and Chief Executive Brad Menezes said. Clark routes requests through a cadre of specialized AI agents covering design, security, quality assurance and IT policy. That mimics how a real internal development team operates. Superblocks is betting that the volume of homegrown software in use in enterprises will grow as generative AI lowers barriers to entry. Clark uses an assortment of popular LLMS that are trained using “unique, enterprise context on the company’s design system,” Menezes said. “When you build an application in Superblocks, you know it has the right audit logging, permissions, private data and integration.”
Google’s contribution to vibe coding is Stitch, a platform that designs user interfaces (UIs) with one prompt
Google is releasing Stitch, a new experiment from Google Labs, to compete with Microsoft, AWS, and other existing end-to-end coding tools. Now in beta, the platform designs user interfaces (UIs) with one prompt. With Google Stitch, users can designate whether they want to build a dashboard or web or mobile app and describe what it should look like (such as color palettes or the user experience they’re going for). The platform instantly generates HTML, CSS+ and templates with editable components that devs and non-devs can customize and edit (such as instructing Stitch to add a search function to the home screen). They can then add directly to apps or export to Figma. Users can choose a ‘standard mode’ that runs on Gemini 2.5 Flash or switch to an ‘experimental mode’ that uses Gemini Pro and allows users to upload visual elements such as screenshots, wireframes and sketches to guide what the platform generates. Google also plans to release a feature allowing users to annotate screenshots to make changes. Stitch is “meant for quick first drafts, wireframes and MVP-ready frontends.”
Following the removal of some consent orders Wells Fargo is preparing to grow its retail deposits business focused on primary checking account growth
Wells Fargo CEO Charlie Scharf expressed confidence that the bank is inching closer to the point it will be freed from the $1.95 trillion asset cap it’s operated under for seven years. There’s been plenty of speculation that 2025 will be the year Wells is freed from the growth restriction. Analyst Ken Usdin noted the bank is “closer and closer to emerging from what’s been a very inward-focused period of time for the company,” as it’s overhauled risk management and internal controls to satisfy its various regulatory orders. Wells is spending about $2 billion annually on its risk and control agenda, and has simplified its business, exiting some areas with lower returns or lackluster growth rates. The bank has also brought in a number of fresh faces – 150 of the bank’s top 220 people are new – establishing the “proper risk mindset” at the company, Scharf said. Lifting the asset cap and the ultimate consent order are two different decision points for the Fed, and Scharf said he couldn’t speak for the central bank’s timing. He noted, though, that most of the work completed for other now-closed consent orders is “foundational” to those that remain. With the removal of that limitation on the horizon, the bank is preparing to pounce on growth in its retail deposits business. Given the fake-accounts scandal, sales practices were “front and center” among the bank’s issues, Scharf said, so the bank had to “literally scale back almost everything that we were doing to drive growth in the retail system, and then rebuild it from the bottom up.” During a multiyear period, the bank “didn’t have branch [profits and losses], we didn’t have sales reporting, we weren’t focused on expanding the product set, improving the digital capabilities, because we were so focused on creating the right infrastructure to satisfy the regulators – appropriately so – so that they and we could be comfortable, when we turn these things back on, that we could grow properly,” he said. The closure of the sales practices consent order “was a hugely important point,” revealing regulators’ comfort level, allowing Wells to re-create an environment where the bank can focus on doing more for customers, he said. Wells is particularly focused on primary checking account growth, Scharf said. To do that, the bank has changed compensation plans and introduced reporting; simplified its product set and segmented it to serve more and less affluent customers; is spending “significantly more” on marketing; and is focused on improving its branch experience while bolstering digital capabilities, he said. Each of the bank’s segments – consumer and small-business banking, consumer lending, wealth management, commercial banking and corporate and investment banking – “should be growing faster than they’re growing today and have higher returns,” Scharf said. When the asset cap is eventually lifted, “there’s no light switch” related to the bank’s growth trajectory, he said. But “it does lift a cloud that exists around Wells,” as the cap has limited the bank, both tangibly and in mindset. The bank has been constrained in its ability to take commercial deposits, for example, and its corporate and investment bank growth has been limited.
J.P. Morgan’s Trends in Healthcare Payments report highlights a 243% increase in the use of eStatements as the primary method for patient collections demonstrating the growing momentum of digital solutions
J.P. Morgan Payments published its fifteenth annual “Trends in Healthcare Payments” report, which highlights the evolving landscape of healthcare payments. While providers and executives are optimistic about the growth potential within the healthcare sector at the start of 2025, persistent challenges such as consumer dissatisfaction, economic hardship and cybersecurity continue to shape trends and innovation in healthcare payments. Below are some of the key takeaways from our report.
- The transition to electronic workflows offers substantial cost savings, consumer experience enhancements and time efficiencies, yet the continued reliance on paper processes impedes progress. Patient collections are the primary revenue concerns for providers, increasing 133% from 2011 to 2024. 71% of providers report that it takes over 30 days to collect payments after a patient encounter.68% of payers still reimburse providers with paper checks, compared to 60% in 2023, underscoring strong reliance on legacy processes. 91% of providers issue refunds to patients for overpayment of medical bills, while more than half issue refunds via paper check.
- Payment innovation, particularly around AI, is emerging as a key driver of industry transformation, with digital solutions gaining momentum among consumers, creating a need for more efficient and consumer-centric experiences. 72% of consumers under the age of 35 have switched providers, or are willing to do so, for a better healthcare payment experience. There has been a 243% increase in the use of eStatements as the primary method for patient collections from 2016 to 2024, demonstrating the growing momentum of digital solutions among consumers. 62% of consumers prefer to pay their medical bills online, indicating a strong consumer demand for digital payment solutions. Only 22% of consumers always know how much they owe for a provider visit beforehand, highlighting the need for improved transparency and information sharing.
- The healthcare industry has experienced large-scale cyberattacks, leaving many organizations financially impacted. This underscores the urgent need for innovative solutions to protect sensitive data and maintain trust among consumers and providers. 92% of providers have identified cybersecurity as a high priority within their organizations, reflecting a growing awareness of the risks posed by cyber threats and the need for robust security measures.
UWM will offer 5/1 ARMs for FHA and VA loans, letting borrowers to shave at least 50 basis points off their rate compared to a conventional fixed mortgage
United Wholesale Mortgage (UWM) will begin offering fixed interest rates for the first five years on Federal Housing Administration (FHA) and U.S. Department of Veteran Affairs (VA) adjustable-rate mortgages (ARMs). The 5/1 option provides a fixed interest rate for the first five years, after which the rate adjusts annually based on market conditions. ARMs typically gain market share when rates are elevated, as borrowers can access lower initial rates compared to traditional fixed-rate mortgages. According to industry experts, most borrowers can shave at least 50 basis points off their rate compared to a conventional fixed mortgage by choosing an ARM. ARMs can be attractive to borrowers who anticipate interest rates will decline as they have the option to refinance or move before the adjustment period begins. “With this product, mortgage brokers can typically offer lower initial interest rates and monthly payments compared to a fixed mortgage, giving borrowers the opportunity to save more money,” UWM explained. “As rates go up, ARMs become more exciting, especially with the yield curve becoming more normalized,” Mat Ishbia, UWM president and CEO, said. “But with that being said, people still think ARMs are a four-letter word, and people are scared of ARMs.” Ishbia added: “ARMs are interesting, but I don’t think they’re as viable or present as big of an opportunity as they did five, seven or eight years ago, from my perspective. We are prepared, we do a little bit of it, and we will probably do a little bit more, but it won’t be meaningful enough that it will hit your radar.” The Mortgage Bankers Association (MBA) reported Wednesday that ARMs accounted for 7.5% of all mortgage applications for the week ending May 23. The typical baseline share is between 3% and 5%. Borrowers are increasingly turning to 7/1 ARM products, according to Mike Fratantoni, the MBA’s chief economist, during the trade group’s Secondary & Capital Markets Conference in New York City this month.
Latest Fed survey says 24% of BNPL users were behind on payments in 2024, up from 18% in 2023
In its latest Survey of Household Economics and Decision making, or SHED, report, the Fed found that 24% of BNPL users were behind on payments in 2024, up from 18% in 2023. More than half of those late payers, 13% of the total user base, were charged extra because of their delinquency. Overall use of installment payment services ticked up from 14% to 15%, according to the survey. Low-income borrowers were the most likely to miss payments, according to the survey, with 40% of users earning less than $25,000 a year reporting a delinquency. Among consumers earning between $25,000 and $49,999 — the income group with the highest reported BNPL usage rate at 19% — 26% said they paid late last year. Delinquencies were also more common among younger demographics, with 32% of 18- to 29-year-olds reporting at least one late payment last year. Black and Hispanic consumers — who had the highest usage rates of BNPL products at 25% and 21%, respectively — also had higher than average late payment rates, at 29% and 32%. Most BNPL users turned to the product because of personal preferences, with 87% saying they did so to spread out payments over time and 82% reporting that it was a matter of convenience. But more than half of users said they would not otherwise be able to afford their purchases if it weren’t for BNPL programs. This was particularly true for lower-income respondents, with 72% of BNPL users earning less than $50,000 saying they used it to pay for something otherwise out of reach, up from 69% last year. Meanwhile, credit card ownership declined slightly, with 81% of respondents saying they owned at least one, down from 82% last year and a peak of 84% in 2021 but up from 77% in 2015. The share of consumers carrying a balance on their credit cards fell to 46%, down more than 10 percentage points from a decade prior. Middle-income earners — those making between more than $25,000 but less than $100,000 — were the most likely to carry a balance from one cycle to another. A higher share of low-income respondents carried balances, but a smaller share of those adults owned credit cards. Black consumers had the lowest credit card ownership rate at 69% as well as the highest prevalence of carrying a balance at 72%. Likewise, 72% of Hispanic respondents said they own a credit card and 60% carried a balance.
PNC extends financial education to families of pre-K children partnering a nonprofit focused on helping people move toward economic self-sufficiency
For about two years now, the PNC Center for Financial Education (CFE), an effort led by Community Development Banking, has been collaborating with community-based nonprofits to offer financial education to individuals, first-time homebuyers and small businesses. Now, in a new collaboration with PNC Grow Up Great, the CFE is teaming up with PNC Grow Up Great partner early education centers to deliver financial education to families of pre-K children. Fred Landis of Organizational Financial Wellness and Gus Torres of Corporate & Institutional Banking, both relationship managers in Central Pennsylvania, have volunteered their time to facilitate financial education seminars for the past year. They present the CFE “banking basics” curriculum to individuals who sign up through Community Progress Council, a York County nonprofit focused on helping people move toward economic self-sufficiency. The nonprofit is a Head Start provider and PNC Grow Up Great partner; Ellen Kyzer, PNC client and community relations director for the Central PA market, also serves as board chair. The seminar explains how to create a spending plan, build a savings account and more to participants, most of whom are working toward becoming first-time homebuyers. The organization says its partnership with PNC has been an asset. “Learning how to create a spending plan, building a savings account and manage existing resources are all stepping stones to economic mobility,” said Ruth Robbins, Community Progress Council chief program officer. “With a strong foundation, York County families can better weather any unexpected challenges as they work with us toward their goals in education, employment and income.” The PNC Grow Up Great and CFE collaboration is being offered in a number of PNC markets beginning in April and continuing throughout the year. Volunteers can help teach a financial education workshop to families of pre-K children enrolled at PNC early education partner centers in their market, either in-person or virtually, following a CFE Facilitator Guide.
Report says open banking has not lived up to its potential in UK; it has not reached profitability despite success in some areas, such as faster lending decisions
Open banking has not lived up to its potential in Great Britain, according to a report by the Financial Times. While it has seen success in some areas, such as faster lending decisions, it has not reached profitability, with higher interest rates cooling investor enthusiasm. Open banking technology allows customers to share their financial information with other banks, apps, and online retailers, and allows lenders to permit pay-by-bank remittances without card intermediaries. The excitement around open banking accompanied the past decade’s U.K. FinTech boom, making London a leader in the sector. However, many users are unaware of the technology’s availability and do not see the benefits of digital wallets like Apple Pay. The awareness gap for open banking is not just confined to the U.K., with 56% of American consumers not familiar with pay by bank. However, incentives can help bridge this gap, with Generation Z and high-income individuals being particularly receptive to pay by bank, especially when coupled with incentives.