Posted In:

Banking, Industry, Bitcoin


#518
Outstanding Overdraft

Published:

Dec 11, 2023


Author:

Cindy Grazer

Posted In:

Banking, Industry, Bitcoin

Published:

Dec 11, 2023


Author:

Cindy Grazer


Share:

After a technology upgrade at Comerica bank in May, transaction errors in the new wealth management platform have left the general ledger of the bank’s own wealth management division in overdraft. As of September 30, 2023, Comerica had $175b in assets under management in its trust administration unit, which was affected by the upgrade. Executives told the bank staff that these errors could result in write-downs if unrecovered, and regulators are probing the bank to investigate the matter.

Erroneous transactions on the platform included trust-account payments failing to go through, getting posted multiple times and posting the wrong amount. In turn, Comerica ran into issues pulling in reimbursements from trust managers, leaving their own bank account in deficit. The platform has also crashed repeatedly. Less than $500k of funds have been written down so far, and employees have been directed to try and collect funds, according to the WSJ.

This technology upgrade had been planned for years but was held off due to unsuccessful test runs. When it was launched in May, some employees had reportedly voiced concerns that it was still not ready. The duration and effort going into implementing these technology updates demonstrates the complexity of financial institution technology stacks, as well as the magnitude of consequence associated with bugs, leaving room for modern technology architecture and sophisticated fintech players to create value. After all, a bank overdrafting on its own account is… almost as good as George Santos making bank on Cameo!

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Portfolio News


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Outstanding Overdraft


Texas bank overdraws its own accounts after messy tech update - Regulators are probing Comerica after a botched technology upgrade left the bank’s wealth-management unit short millions of dollars. Read more

Comerica’s Botched Tech Update Is Being Scrutinized by Regulators - Bank regulators reportedly are investigating a failed tech update at Dallas-based Comerica that resulted in errors on transactions for its trust clients. Read more

Industry News


Venmo no longer accepted on Amazon in January - Amazon is set to stop taking payments via PayPal-owned Venmo in the coming weeks. Both companies declined to comment on why the partnership ended. Read more

Franklin Templeton’s CEO holds Bitcoin, Ether, and other tokens in her portfolio - Jenny Johnson, the CEO of investment manager Franklin Templeton, said she holds BTC, ETH, and SUSHI in her portfolio. Read more

Digital payments are having a jolly holiday - BNPL-driven spending in November grew 17% year-over-year to $8.3b, with a major boost from e-commerce sales to help boost the platforms that stores and sellers use for digital payments and shopping. Read more

Crypto Miner Phoenix Group's shares surge 35% in Abu Dhabi stock market debut - The company said its initial public offering (IPO) was 33x oversubscribed. Read more

Société Générale to become first big bank to list a stablecoin - Société Générale is set to launch its own stablecoin called EUR CoinVertible, on Bitstamp, becoming the first big bank to offer digital tokens tracking the price of hard currencies to a wide range of investors. Read more

Digital brokerage public rolls out fractional bond investing - As an industry first, Public, the digital investing platform, plans to sell fractions of certain Treasurys and corporate bonds to customers at around $100, with hopes to eventually offer fractional bonds for as low as about $10. Read more

Block will release Bitkey hardware wallet to 95 countries - Jack Dorsey’s Block announced today that it is releasing its hardware Bitcoin wallet, Bitkey, in 95 countries. Read more

Generative AI in the enterprise - The O'Reilly report on "Generative AI in the Enterprise" reveals its rapid adoption in businesses, primarily for programming, data analysis, and customer interaction. Read more

SocGen’s crypto unit debuts euro-pegged stablecoin - The stablecoin marks the first time a regulated European bank has made a euro-pegged stablecoin available on a crypto exchange. Read more

X is now licensed for payment processing in a dozen US states - Musk has previously spoken about his plans to morph X into a payments platform, having earlier detailed his vision for the future of the company shortly after the acquisition. Read more

Tokenization of RWAs gets push in Europe as AXA, Generali buys SocGen's green bonds on Ethereum - SocGen said tokenized bonds provide greater transparency and traceability, as well as speedier transactions and settlements. Read more

Adyen to act as a global acquiring bank for Klarna - Buy now pay later giant Klarna has selected Adyen as a global acquiring partner, responsible for collecting card-based payments from customers and their banks, and then delivering them to retailers and merchants - both in-person and online. Read more

Crypto.com receives UK authorization as an electronic money institution - The exchange said it plans to use the license to offer e-money products in the UK. Read more

Congress votes to scrap CFPB small business lending data rule - Congress has voted to pass a Senate joint resolution to overturn the Consumer Finance Protection Bureau’s (CFPB’s) small business data rule. Read more

Bitcoin tops $42k as crypto market recovers to pre-Terra levels - Ether also rose past $2.2k for the first time in months. Read more

Select Financings


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Babylon - Australia based Bitcoin staking protocol raised $18m in Series A funding led by Polychain Capital and Hack VC. Read more

Banxware - Berlin based lending-as-a-service platform raised €15m in Series A funding led by Unicredit. Read more

Bujeti - Africa based corporate card and spend management platform raised $2m in Seed funding led by Y Combinator. Read more

Center - Washington based expense and travel software maker raised $30m in Series C funding led by Top Tier Capital Partners. Read more

Curvance - Cayman Islands based DeFi platform for lending and borrowing raised $3.6m in Seed funding led by Offchain Labs. Read more

Igloo - Singapore based insurtech raised $36m Series B funding led by Eurazeo. Read more

January Technologies - New York City based debt collection platform raised $12m in Series B funding led by IA Ventures. Read more

Koho Financial - Toronto based challenger bank raised C $86m in Series D funding led by Drive Capital. Read more

Klook Travel Technology - Hong Kong based travel booking company raised $210m in Series F funding led by Bessemer Venture Partners. Read more

Mulberri - California based startup providing an embedded insurance platform for SMBs raised $6.75m in Series A funding led by Eos Venture Partners. Read more

Navadhan - Mumbai based rural fintech raised $5m in Seed funding led by Prime Venture Partners. Read more

Necto - New York and Singapore based corporate banking API aggregator raised $8m in Seed funding led by Nyca Partners. Read more

Omniful - UAE based supply chain and e-commerce enablement startup raised $5.9m in Seed funding led by VentureSouq. Read more

Pontera - New York based wealth management platform raised $60m in new funding led by Iconiq Growth. Read more

Plum - London based money management app raised €5m in new funding led by Eurobank. Read more

Scalable Capital - Munich based digital wealth management platform raised €60m in new funding led by Balderton. Read more

Shadow - New York based crypto data platform startup raised $9m in Seed funding led by Paradigm. Read more

Sindri - Colorado based zero-knowledge blockchain infrastructure platform raised $5m in Seed funding led by CoinFund. Read more

Simply Homes - Maine based i-buyer focused on affordable housing raised $22m in Series B funding led by Gutter Capital and Watchung Capital. Read more

Solvento - Mexico City based fintech company serving Latin America's trucking sector raised $3.5m in Seed funding led by Quona Capital. Read more

Spade - New York based fintech fraud prevention startup raised $10m in Series A funding led by Flourish Ventures. Read more

Tappi - Kenya based e-commerce platform for SMBs raised $1.5m in Pre Seed funding led by Mercy Corps Ventures and Chui Ventures. Read more

Virtuo - Calgary based homeownership concierge platform raised C $3.5m in Seed funding led by ATB Private Equity and TELUS Ventures. Read more


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