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Trump badly wants a strong stock market. New data suggests he should stop tweeting to help that happen.

Tue, 09/03/2019 - 3:44pm

  • Since Donald Trump was elected president in 2016, his tweets have become one of the most frequent drivers of volatility in the stock market. 
  • The president has also repeatedly indicated that maintaining a strong stock market is a priority of his.
  • Data compiled by Bank of America shows that on days when Trump is more active on Twitter, the markets typically fall. When Trump tweets less, the markets tend to rise. 
  • Trump often tweets about impactful trade and economic policy initiatives. And given how often those comments are inflammatory, investors are frequently rattled.
  • Visit the Markets Insider homepage for more stories. 

President Trump might desperately want a healthy stock market, but it appears his Twitter habits aren't helping. 

Over the last three years, the market has fallen an average of 9 basis points on days Trump publishes more than 35 tweets, according to data compiled by Bank of America Merrill Lynch. On the flip side, the firm finds the market has risen an average of 5 basis points on days the presidnet has tweeted fewer than five times.

"Trade talk, political campaigning and tweets have contributed to volatility, from China to Fed policy to tax policy," Bank of America said in a note to clients on Tuesday.

The firm also said US economic policy uncertainty — which often directly correlates with volatility — has risen to its highest level in three years. 

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President Trump uses Twitter to communicate and comment on economic and trade policy, requiring investors to pay close attention to what he tweets about and how often. Trump has also repeatedly used twitter to criticize the US Federal Reserve and Chairman Jerome Powell over its handling of monetary policy.

The president has also said in the past that he wants a strong stock market. Last Monday, Trump said Chinese officials called his administration to restart trade negotiations, sparking a rally that reversed what was expected to be another day of steep losses for stocks. 

CNN reported that Trump may have embellished those references to high-level trade talks with China to sooth anxious investors in an attempt to shore up optimism within the markets. 

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The ever-escalating trade war with China has brought the US to the brink of recession, a top economist warns

Tue, 09/03/2019 - 3:10pm

  • The trade war between the US and China is pushing America closer to a recession, according to UBS economist Seth Carpenter.
  • A new round of tariffs went into effect on September 1, and they trade war showing no sign of slowing.
  • Carpenter says it increases uncertainty for businesses going forward and could impact consumption and unemployment.
  • While UBS's house view is that the US will avoid recession, Carpenter says there are still downside risks. 
  • Read more on Markets Insider.

President Trump's trade war with China is pushing the US closer to a recession, according to a Tuesday report from UBS's chief US economist.

The commentary comes after anew round of tariffs went into effect on September 1. They included taxes of 15% that went into effect on $113 billion of goods imported from China to the US. Trump had previously planned to levy a 10% duty, but increased it as retaliation for further trade measures instated by China.

"The move clearly shows that 25% is not a ceiling on tariffs and thus must increase materially the uncertainty about the outlook for the trade war for businesses," wrote Seth Carpenter, chief US economist at UBS. 

As tariffs have mounted, economic challenges have grown, wrote Carpenter. Data show that imports of goods have fallen 40% because of tariffs, and domestic spending has been consistently weak since tariffs were enacted last year, he said. 

In addition, as more tariffs have been enacted, they've impact consumer goods. This will continue to disrupt production lines, which could lead to a decline in employment, Carpenter said.

"As a consequence, business investment and household spending suffer," he wrote.

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Carpenter is also acutely focused on consumption, which he says represents almost 70% of the US economy and therefore largely impacts gross domestic product.

He says tariffs drag consumption in two ways: (1) higher prices lead to less spending and (2) businesses spend less as well, which can lead them to stop hiring and drive up unemployment. Carpenter expects that the economy will stall in the first half of 2020, and that historic low unemployment rates will tick up to 4.3% by the end of that year. 

But Carpenter still sees the US narrowly avoiding a recession — although he does identify some clear downside risks.

"A further shock to the economy could result in contraction," Carpenter wrote.

He also says sectors such as energy and retail could slide further, while mounting political risks could also create formidable headwinds.

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10 best new cars, trucks, and SUVs for college freshmen

Tue, 09/03/2019 - 2:35pm

  • Crossovers from Honda, Toyota, and Mazda offer the best combination of safety, value, and reliability for college-age drivers.
  • Vehicles from Nissan, Chevy, and Ford are also worth a look.
  • For some freshman, an electric car could be a superb option. Look no farther than the base Nissan Leaf. Doubts about EVs? Then the Toyota Prius is our top pick.
  • Visit Business Insider's homepage for more stories.


You might send your kid off to college with new clothes and high ambitions, but you might also want to gift them some wheels. 

Young drivers tend to benefit from a combination of safety, fuel-economy, and low car payments when it comes to their cars. But that doesn't mean you should automatically look to the cheapest vehicles on the market. These are an options, but a solid, mass-market crossover from a Japanese manufacturer has always been an excellent choice.

That hasn't changed, which is why most of the vehicles on our list fit that description. Still, we threw in a bit of variety.

Read on to explore the ten best new frosh-mobiles, in our opinion:

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1. Honda CR-V. Base price: $24,500. The CR-V has been an outstanding first set of wheels since it was first introduced in the 1990s. This compact crossover combines Honda reliability with versatility, cargo capacity, and better than 30 mpg in highway driving.

2. Mazda CX-3. Base price: $20,390. Subcompacts aren't always the best choice for young drivers, but the CX-3 has a 5-star overall safety rating from National Highway Traffic Safety Administration and an appealing price. It's also plenty of fun to drive, thanks to its peppy 148-horsepower engine.

3. Subaru Outback. Base price: $26,645. The Outback isn't fancy, but it is a near-faultless wagon, with an industry-standard all-wheel-drive system and a great record for safety and reliability. If your freshman is headed to a school where it snows, the Outback is a no-brainer.

4. Toyota RAV4. Base price: $26,650. If you have any doubts about the CR-V, the RAV4 is Toyota's version of the all-purpose crossover SUV. The front-wheel-drive version is worth a look.

5. Toyota Prius. Base price: $24,200. This is my personal pick for best college freshman-mobile. The Prius is reliable, has good cargo capacity, and with fuel economy of around 50 mpg, it would be very easy on a student's budget.

6. Nissan Altima. Base price: $24,100. Young folks aren't much interested in sedans, but for the money, the all-new Altima is among the best in the midsize market right now. It's easy to drive and has an adequately powerful 188-horsepower engine.

7. Chevy Blazer. Base price: $28,800. The reintroduced Blazer borrows styling from the Camaro and comes with either a 3.6-liter V6 engine, making 305 horsepower or a 193-horsepower four-banger. It's an attractive, entry-level midsize crossover with some heritage.

8. Nissan Leaf. $30,000. The Chevy Bolt is also a good choice, but the Leaf has been around a bit longer and provides more creature comforts. The base Leaf serves up 150 miles of range on a charge, ideal for a freshman who might be living close to home or driving infrequently at school.

9. Ford Mustang. Base price: $26,670. In EcoBoost Fastback coupé or snazzy convertible trim, with a mere 310 horsepower, the Mustang is fun, but not too much fun — and an ideal sports car for a young driver.

10. Chevy Colorado. Base price: $21,300. The Colorado singlehandedly revived the small-pickup segment in the US, which has been owned by Toyota. With superb infotainment and respectable 200-horsepower four-cylinder engine in the base model, the Colorado is a lot of truck for the money.

Giant opiate producer Mallinckrodt could soon be completely worthless, analyst says (MNK)

Tue, 09/03/2019 - 2:24pm

  • Patrick Trucchio, one of two analysts with a sell rating on drugmaker Mallinckrodt, lowered his price target to $1 and said the company shares could fall to $0.
  • Shares fell to an all-time low on the news. The stock has fallen more than 85% this year as Mallinckrodt has been criticized for its role in the opioid crisis.
  • The downgraded rating is due to increased litigation risk for the company. Trucchio raised his assumption of liability to $3 billion from $1.5 billion for the company. 
  • Watch Mallinckrodt trade live on Markets Insider. 

Mallinckrodt, a pharmaceutical company, could fall to $0 in the worst-bear case scenario according to a Tuesday note from Patrick Trucchio of Berenberg. 

In early trading Tuesday, shares of the company fell to an all-time low of $2.28. The slide came after Trucchio, one of two analysts that have a sell rating on shares of the company, lowered his price target for the company to $1 from $5, reiterated a "sell" rating on the shares, and warned that the stock could fall even further.

Mallinckrodt's stock has plummeted more than 85% this year as the company has become ensnared in the national opioid crisis. It's among the entities that's been accused by states and cities of failing to stem the massive influx of highly addictive opioids into the US.

"The opiate litigation storm is speeding up," Trucchio wrote. "Adverse outcomes or read throughs from these trials may signal further losses to come for MNK and for all the opioid-iverse." 

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A number of key judgements have been handed down lately in cases about the makers of opioids. In a case in Oklahoma, Johnson & Johnson was ordered to pay $572 million for helping fuel the opioid epidemic. Purdue Pharma, the OxyContin producer, is also mulling a payout of $10 billion to $12 billion to resolve more than 2,000 opioid related lawsuits. 

These cases increase the risk that other pharmaceutical companies like Mallinckrodt could face litigation in the future, according to Trucchio. The revised price target is because Trucchio raised his assumption of opioid-related liability to $3 billion from $1.5 billion. 

Mallinckrodt has also been accused in a whistleblower lawsuit of bribing doctors and its own staff to increase prescriptions of Acthar, a drug for infantile spasms that became increasingly profitable for the company, Business Insider's Emma Court reported. Shares of Mallinckrodt dropped more than 14% when the news broke in April.

If Mallinckrodt is involved in litigation relating to either issue, there's some worry that it would be able to pay out, according to Trucchio.

As it stands right now, the company's historically low stock price means it can't raise capital in the equity market. There's also is some fear that the company will not be able to meet its debt obligations, which Trucchio says would mean a bankruptcy filing is possible. 

Mallinckrodt has more than $5 billion of debt, most of which will start to come due in 2020, according to Bloomberg. The company recently announced that it borrowed the final $95 million on its revolving credit line, meaning that it has no more capacity to borrow. 

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NYC luxury real estate just had its slowest month in 6 years. Some developers are chopping up multimillion dollar penthouses into multiple smaller apartments to get them off the market.

Tue, 09/03/2019 - 2:07pm

The prospect of a July 1 tax hike prompted a boom in luxury condo sales in New York City in June 2019, The Wall Street Journal reported. 

But the surge of high-end sales didn't last. In July, sales of Manhattan homes priced at $2 million or above dropped to their lowest levels in more than six years, according to the Journal.

New York City has more super-expensive and ultra-luxurious penthouse apartments than it knows what to do with.

In Manhattan, there are currently more than 50 penthouses on the market for $20 million or above, according to StreetEasy.

Many of these penthouses sit on the market for months or years and eventually get significant price chops. 

"Like any commodity, when the market is saturated with them, their value declines," Jason Haber, an agent at Warburg Realty in Manhattan, told Business Insider. "If under every rock you found a diamond, diamonds would decline in value. That's what is happening right now."

Read more: A SoHo triplex penthouse got a $5.5 million price chop, but it could still break the record for the most expensive apartment ever sold in downtown NYC

Other sellers offer wild perks to sell their extravagant penthouses, such as the $85 million Hell's Kitchen condo that comes with tickets to outer space and a couple of Rolls Royce luxury cars.

Developers are breaking up massive penthouses to get them off the market.

But sometimes discounts and perks are still not enough, and with the traditional penthouse losing its allure for many buyers, developers are carving up penthouses into multiple cheaper listings to get them off the market.

At 432 Park Avenue, New York City's tallest completed residential building, the 95th-floor penthouse was originally listed for $82 million for the full floor, but it sat on the market for more than two years. In late 2018, the condo was split into two separate listings — penthouse 95A for $41.25 million and penthouse 95B for $40.75 million, as Curbed reported. One faces north and one faces south, but the layouts aren't much different.

Just a few blocks away at 520 Park Avenue, developers split a 12,398-square-foot triplex penthouse, first listed in 2014 for a staggering $130 million, into two separate units: One simplex listed for $40 million and one duplex penthouse asking between $80 million and $100 million, according to The Real Deal.

The Real Deal pointed to this as part of a trend of "developers opting to split once-massive penthouses into two or more smaller units."

Splitting huge penthouses into smaller apartments often gets them off the market.

If past sales are any indication, this strategy might be a good one. 

A few months after being split into two separate listings, the $82 million penthouse at 432 Park Avenue finally sold as two apartments: for $30.7 million and $30.2 million respectively.

And back in 2016, a 12,000-square-foot, $80 million penthouse at 160 Leroy Street in the West Village was split into two smaller units: One asking $31.5 million and the other $48.5 million, according to Curbed. And it worked — the cheaper one sold in 2017 and Michael Rubin, part owner of Philadelphia's 76ers and the New Jersey Devils, bought the larger unit in 2018 for $43.5 million, Forbes reported.

That being said, the penthouse has not entirely lost its appeal, or its status, in 2019. Ken Griffin's $238 million purchase of the penthouse (floors 50 through 53) at 220 Central Park South shattered the US real-estate record in the first weeks of January. The record had previously been held by Barry Rosenstein's $137 million Hamptons home purchase in 2014.

SEE ALSO: A SoHo triplex penthouse got a $5.5 million price chop, but it could still break the record for the most expensive apartment ever sold in downtown NYC

DON'T MISS: A billionaire movie producer is selling a one-bedroom apartment that takes up an entire floor of NYC's Ritz-Carlton for nearly $40 million

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From competition to collaboration: How PayPal turned challengers like Visa and Mastercard into partners

Tue, 09/03/2019 - 1:47pm

  • PayPal inked strategic partnerships over the past three years with more than 40 companies it previously would have considered competitors.
  • Jim Magats, PayPal's senior vice president of payments, product, and engineering, told Business Insider the move was meant to offer customers more options and put PayPal at the center of a payments ecosystem. 
  • As part of the evolution of the network, the payment processor has started sharing its risk score with some large issuers, which has led to an uptick in approval rates. It is also plotting new ways to connect partner companies. 
  • Click here for more BI Prime stories.

PayPal's July 2016 announcement of a strategic partnership with its longtime rival Visa didn't spark an ideal reaction from investors. 

The deal was a big one for the payment processor and signaled a pivot toward collaboration. PayPal had previously encouraged users to connect accounts directly to their bank instead of going through credit-card issuers.  Circumventing cards had meant a larger profit on transactions for PayPal, but it also annoyed issuers, who felt they were getting cut out of deals.

The decision to partner gave PayPal customers more payment options, but investors weren't sold. The day after revealing the partnership with Visa, PayPal shares opened down nearly 8%.

PayPal has since expanded its partnership network, and it's even sharing internal data with big issuers to help streamline payments. Now it is looking for even more ways to connect outside companies, Jim Magats, PayPal's senior vice president of payments, product, and engineering, told Business Insider.

But at the time, many seemed uncertain if it was the right play.  

"A lot of people thought we were crazy to go out of customer choice," Magats said. Watching PayPal's stock tumble  in the minutes after the Visa announcement was a "very humbling experience," he said. 

Read more: PayPal's CFO says its new partnership with Facebook Marketplace could dwarf the business it does with eBay

The stock has more than made up for that dip. Shares in PayPal are up roughly 190% over three years. And while a large part of that is thanks to the general growth of the payments space, PayPal's strategic partnerships have helped. 

According to PayPal's most recent earnings report, roughly 10% of the payment processor's net revenue comes from "other value added services," which includes revenue earned through partnerships. The network of strategic partners now numbers more than 40, all blossoming from that initial Visa deal.

PayPal's strategic partnership network spans a variety of industries, including card issuers such as Visa and Mastercard, big banks like Citi and Bank of America, tech companies like Facebook, and retail stores like Walmart. 

Magats said the decision to embrace the competition came from a simple question: What did PayPal want to be? 

After its split from eBay in 2015, many wondered where PayPal would sit within the payments ecosystem, Magats said. Offering customers more options, as opposed to limiting them to PayPal, seemed like a growth opportunity, he added.

"We were relatively confident that we had a lot of really good assets, and we had a lot of really good assets that other people would want to collaborate with us," Magats said. "We also knew that no one themselves could actually really make payments at scale work."

Sharing risk information has big benefits

PayPal is now laying the groundwork for even more ways it can deepen ties with former rivals. That includes sharing information that can lead to processing more transactions. 

PayPal has begun sharing its internal-risk score, which Magats said is akin to a FICO score, with a handful of some of the largest issuers. While it's still early days, the move appears to be improving authorization rates, meaning more payments get the green light. 

At one of the biggest issuers, which Magats declined to name, PayPal saw nearly a 3% increase in authorization rates on transactions where it shared risk scores over the past six months. Overall, through partnerships and sharing of PayPal's internal tools, approval rates on PayPal transactions have risen by 1% over the past 18 months. 

"Because PayPal is a two-sided network, we have information on most consumers and merchants that do online and mobile shopping. We have a pretty good idea as to who's good and who isn't good," Magats said. "When they're making a decision on a customer, they basically embed the PayPal score into it."

Read more: PayPal's CFO believes AI can save the company $25 million a year by automating one area of customer service

There's more to come — Magats said PayPal's work with strategic partners was, to use a sports reference, just wrapping up the first quarter.

Magats said next steps would be focused on making more connections between various members of the network, including expanding how rewards points and cash back can be redeemed, and growing into other regions, such as Latin America.

"Now it's about how do you take these things and, more, integrate the experiences together," Magats said. "It's the collection of everything that comes together that creates really great customer experiences."

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AI IN BANKING: Artificial intelligence could be a near $450 billion opportunity for banks — here are the strategies the winners are using

Mon, 09/02/2019 - 10:00pm

Discussions, articles, and reports about the AI opportunity across the financial services industry continue to proliferate amid considerable hype around the technology, and for good reason: The aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023, with the front and middle office accounting for $416 billion of that total, per Autonomous Next research seen by Business Insider Intelligence.

Most banks (80%) are highly aware of the potential benefits presented by AI, per an OpenText survey of financial services professionals. In fact, many banks are planning to deploy solutions enabled by AI: 75% of respondents at banks with over $100 billion in assets say they're currently implementing AI strategies, compared with 46% at banks with less than $100 billion in assets, per a UBS Evidence Lab report seen by Business Insider Intelligence. Certain AI use cases have already gained prominence across banks' operations, with chatbots in the front office and anti-payments fraud in the middle office the most mature. 

In this report, Business Insider Intelligence identifies the most meaningful AI applications across banks' front and middle offices. We also discuss the winning AI strategies used by financial institutions so far, and provide recommendations for how banks can best approach an AI-enabled digital transformation.

The companies mentioned in this report are: Capital One, Citi, HSBC, JPMorgan Chase, Personetics, Quantexa, and U.S. Bank

Here are some of the key takeaways from the report:

  • Front- and middle-office AI applications offer the greatest cost savings opportunity across banks. 
  • Banks are leveraging AI on the front end to smooth customer identification and authentication, mimic live employees through chatbots and voice assistants, deepen customer relationships, and provide personalized insights and recommendations. 
  • AI is also being implemented by banks within middle-office functions to detect and prevent payments fraud and to improve processes for anti-money laundering (AML) and know-your-customer (KYC) regulatory checks. 
  • The winning strategies employed by banks that are undergoing an AI-enabled transformation reveal how to best capture the opportunity. These strategies highlight the need for a holistic AI strategy that extends across banks' business lines, usable data, partnerships with external partners, and qualified employees.

In full, the report:

  • Outlines the benefits of using AI in the banking industry.
  • Details the key use cases for transforming the front and middle office using the technology.
  • Highlights players that have successfully implemented AI solutions.
  • Examines winning strategies used by financial institutions that are leveraging AI to transform their entire organizations. 
  • Discusses how banks can best capture the AI opportunity, including considerations on internal culture, staffing, operations, and data.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  3. Current subscribers can log in and read the report here. >>Read the Report

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BANKING AND PAYMENTS FOR GEN Z: These digital natives are the next big opportunity — here are the winning strategies

Mon, 09/02/2019 - 8:02pm

Generation Z, defined as customers born between 1996 and 2010, hold up to $143 billion in spending power, but haven't yet developed brand loyalties that dictate where they store and spend that money.

For banking and payments providers, attracting these customers while they're young could lead to lucrative relationships throughout their lives, with value increasing as they age, earn more money, and expand the number of financial products they engage with. 

Most Gen Zers haven't started using financial products beyond a bank account, which makes them a ripe opportunity for players in the space.

As a result, many firms target millennials and Gen Zers together in a push to attract younger customers, but this could be limiting their ability to effectively capture the interest of tweens, teens, and young adults, because Gen Z differs from their older counterparts. As a group, they're more responsive to influence from friends and peers than they are to traditional advertising, less likely to remember life before the internet, and more open to a wider variety of financial service providers than other consumers.

Understanding what makes Gen Zers tick is critical for marketers, strategists, and developers looking to cater to these younger customers and build out a suite of products, tools, and services that they'll want to adopt. In this report, Business Insider Intelligence will use a six-point framework — developed based on industry research and conversations — to explain the core attributes that Gen Z values in a product.

It will then explain how each of these attributes can be applied to banking and payments products, and offer actionable recommendations, strategies, and examples for how to implement them to grab younger customers ahead of the competition.

The companies mentioned in the report are: Affirm, American Express, Apple, Bank of America, Capital One, Citi, Current, Discover, Instagram, Google, Grab, Greenlight, JPMorgan Chase, Mastercard, PayPal, Uber, Venmo, Visa, Wells Fargo, Zelle

Here are some key takeaways from the report:

  • Gen Z's lack of financial services product adoption offers providers a long runway for growth. While two-thirds of Gen Zers have a bank account, many don't yet use debit cards, haven't aged into credit cards or loans, and aren't responsible for the bulk of their own spending. As they navigate life transitions, like going to college or getting a first job, there's ripe opportunity for providers to engage these customers.
  • Gen Z is more interested in digital payments products and services than any other generation. While adoption of mobile wallets has been tepid among the general population and P2P apps, like Venmo and Zelle, are just now gaining traction among older users, Gen Zers are diving in head first: Over half use digital wallets monthly, and over three-quarters use other digital payment apps or P2P apps in the same time frame.
  • To attract, engage, and retain Gen Zers, financial services firms must develop products that are social, authentic, digital-native, and educational, offer value, and evolve over time. This combination, which emphasizes key attributes that Gen Zers value, serve as a roadmap for developing offerings with features that appeal to these users in both the short and long run.

In full, the report:

  • Explains why Generation Z represents a meaningful and urgent opportunity for financial services providers.
  • Outlines a six-point framework for building services that can attract, engage, and retain Gen Zers.
  • Offers specific strategies that banks and payments providers can implement to build products tailored to this generation.
  • Evaluates examples of tactics that work in bringing Gen Zers into the fold and turning them into lifelong customers.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of Payments.

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The top companies providing & using banking-as-a-service technology (BBVA)

Mon, 09/02/2019 - 5:30pm
  • Business Insider Intelligence is launching its brand new Banking coverage in early September.
  • To obtain a free preview of our Banking Briefing, please click here.

Banking-as-a-Service (BaaS) is a key component to open banking, in which banks open up their systems and allow third parties to access their data to enhance their own services. This growing market is transforming retail banking, reshaping incumbents' relationships with customers, and easing entry for fintechs.

The UK is leading the open banking movement with regulatory efforts that are reverberating throughout the world. Countries across continents have introduced open banking regulations of their own, indicating that the financial services industry is moving toward an era where sharing data and infrastructure will be table stakes.

Here are the top companies already implementing BaaS strategies, broken out into two main categories:

  • Pure BaaS Providers
  • Retail Banks w/ BaaS Services
Pure BaaS Providers solarisBank

solarisBank bills itself as a "tech company with a banking license." The Berlin-based startup holds a German banking license and provides a BaaS platform that enables businesses to offer fully digital and compliant white labeled financial services to their end-customers.

Founded in 2016, solarisBank's lets customers seamlessly integrate financial services into their offerings through modern RESTful APIs. The team is focused on building fully automated processes, providing nearly invisible infrastructure to end users, and creating a global digital ecosystem for customers to build their own scalable banking products.

The company boasts nearly 60 global corporate clients, and closed a €56.6 million ($62.7 million) Series B funding round in early 2018 that included investments from BBVA, Visa, SBI Group, and Lakestar.

Some of solarisBank's customers include:

  • Kontist
  • Börse Stuttgart
  • Smava
  • Trade Republic
  • Tomorrow
  • Al Baraka Bank

Learn more about solarisBank.

Bankable

Bankable is a London-based startup focused on enabling incumbent financial institutions, fintechs, and other corporations to bring new payments solutions to market. Its BaaS solutions include a virtual ledger manager, digital banking, payment card programs, and e-wallets. 

Its end-to-end payment services are accessible via an interoperable proprietary platform that's PCI-DSS (Payment Card Industry – Data Security Standards) certified and hosted in Tier-4 data centers for advanced security. Bankable helps its partners meet the technological and regulatory challenges of developing disruptive financial services.

In April of 2019, Bankable announced a partnership with Visa to accelerate its digital banking solutions.

Some of Bankable's customers include:

  • Spendesk
  • GetYourGuide
  • Royale Oceanic

Learn more about Bankable.

Treezor

Treezor is a white label core banking platform that operates as a "one-stop shop payment solution" both receiving and issuing payments. The firm facilitates payment management by enabling its 30 licensed and unlicensed fintech clients to provide their customers personalized credit cards and dedicated International Bank Account Numbers (IBANs).

Founded in 2015, the Paris-based startup is accredited by the French Prudential Supervision and Resolution Authority (ACPR), and is a member of the Mastercard and SEPA networks. Treezor was acquired by Societe Generale in 2018 to accelerate the parent company's open innovation strategy.Some of Treezor's fintech clients include:

  • Lydia
  • Qonto
  • Compte CO2

Learn more about Treezor.

11:FS Foundry

UK-based SaaS/PaaS company 11:FS Foundry is in the process of developing a platform to offer core banking capabilities leveraging tech that eliminates the need to choose between agility and scalability. 

The firm is looking to make core banking upgrades and overhauls – historically seen as high risk, high cost, and, frankly, to be avoided – much more attractive and scalable for clients by  diminishing cost, time to market, and barriers of archaic infrastructure.

In mid-2019 the firm, which launched a year earlier as a subsidiary of 11:FS, announced that its investment partner and first lending client, DNB, had committed a second round of funding to the project.

Learn more about 11:FS Foundry.

Cambr

Formed in 2018 from a partnership between Q2 and StoneCastle, Cambr boasts a full-stack banking service and the nation's largest distributed deposit platform (StoneCastle's network of over 800 community banks).

Although it does not offer completely turnkey BaaS solutions like some of its competitors, Cambr offers the necessary underlying infrastructure by playing to the strengths of its founding partner companies: extensive industry experience, robust technology assets, and strategic banking relationships.

The company currently offers basic deposit accounts, compliance, payments, banking, and debit cards. 

Some of Cambr's customers include:

  • Qapital
  • MoneyLion

Learn more about Cambr.

ClearBank

WorldPay founder Nick Ogden unveiled UK-based ClearBank in 2017 after three years of secretly working on the project. The "bank for banks" provides no services to consumers — instead enabling financial service providers, FCA-regulated businesses, and fintechs to build their own solutions and services.

ClearBank is notably the UK's first new clearing bank in 250 years, and aims to transform the clearing bank experience and create a new level of open competition and transparency in the UK market. Its technology stack transforms the ability for financial institutions to provide current accounts to their customers, resulting in faster, more efficient payments, and financial inclusion.

The firm provides agency banking services including secure access to core banking solutions, payment schemes and systems, all operated within a liquidity-managed account.

Some of ClearBank's clients include:

  • Tide

  • Oaknorth

  • Nationwide

  • Dozens

Learn more about ClearBank

BaaS Providers w/ Retail Banking Services Starling Bank

In October 2018, Starling Bank CEO Anne Boden authored a company blog post announcing "the death of transaction banking" and, in turn, the firm's entrance into the BaaS and Payments-as-a-Service (PaaS) space.

With its pioneering BaaS offering, Starling has opened its APIs to enable banks, fintechs, retailers, and brands to use its banking license to develop customized financial products such as savings or current accounts and debit cards.

Some of Starling Bank's BaaS and PaaS clients include:

  • Raisin UK
  • Ditto
  • UK Department for Work and Pensions
  • Xero
  • Telleroo
  • Vitesse
  • PelicanPay

Learn more about Starling Bank.

Fidor Bank

Fidor Bank is a German digital-only challenger bank that helps financial, retail, and telecom businesses bring their digital banking concepts to life. The startup provides turnkey white label banking solutions covering bank license across Europe, technology, compliance, risk management, go-to-market strategy, and customer service.

Fidor designs, tests, and builds its clients' digital banking projects into its full-service proprietary digital banking platform fidorOS (fOS). Customers can also build a unique customer experience on top of Fidor's APIs if they choose.

Some of Fidor's clients include:

  • O2 Telefonica
  • ADIB
  • Van Lanschot

In 2017 Fidor Solutions and Fidor Bank were acquired by Groupe BPCE.

Learn more about Fidor Bank.

Green Dot

After making a name for itself as the leading provider of prepaid debit cards and, later, mobile banking technology and tax refund disbursement processing, Pasadena-based "branchless" bank Green Dot joined the ranks of BaaS companies in Q1 2019. The fintech's platform provides end-to-end infrastructure for managing a banking or payments program at scale.

Green Dot saw immediate returns after the initial BaaS launch, posting a 6% increase year-over-year in total operating revenue from Q1 2018. CEO Steve Streit attributed the bank's spike in active accounts primarily to its BaaS programs and partnerships, which added 420,000 new active accounts in Q1 2019.

Some of Green Dot's BaaS customers include:

  • Uber
  • Walmart
  • PayPal
  • Stash
  • Apple Pay Cash
  • Pangaea
  • EasyCorp

Learn more about Green Dot.

BBVA

BaaS isn't just for startups and emerging players. Multinational Spanish banking group – and one of the largest financial institutions in the world – Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) moved its open platform out of beta in October 2018.

By connecting to BBVA's core digital banking platform, third parties can access its APIs and specific financial service features including Move Money, Identity Verification, Account Origination, and Card Issuance. 

In addition to offering paid access, the Open Platform team operates a sandbox testing environment, so interested companies can work through their proposals before fully signing up.

Companies using BBVA's APIs include:

  • Simple
  • Azlo
  • Xero
  • Modo
  • digit.co

Learn more about BBVA's open platform.

Growth of Banking-as-a-Service

The open banking movement is proliferating around the world, creating new opportunities for emerging players in the space, and forcing legacy banks to re-examine their business models as a result.

Many industry executives already view open banking as an inevitable and accelerating trend in financial services. In fact, Accenture projects open banking-related services will account for 7% of total banking revenue by 2020 — less than two years after the UK's open banking regulation rollout.

For now, these regulations don't require banks to begin offering BaaS, so those that choose to do so will be ahead of the curve — and likely see high demand as a result.

To keep you ahead of the industry's biggest shifts – like the open banking movement and BaaS – Business Insider Intelligence is launching Banking in September, a new research area with coverage including BaaS and open banking, consumer and business banking, mobile and online banking, digital account opening, and neobanks.

Click here to obtain an exclusive FREE preview of Banking!

Join the conversation about this story »

REPORT: Ant Financial and Tencent are rapidly growing their financial services ecosystems — here's exactly what they offer and where we think they'll go next (TCEHY)

Mon, 09/02/2019 - 5:05pm

Over the past 15 years, spending in China has become increasingly powered by mobile payments. In Q4 2018, China's third-party mobile payments industry was estimated to be worth 47.2 trillion yuan ($6.8 trillion) per Analysys, as cited by TechNode. This eclipsed the country's total retail sales for all of 2018, which came in at 38.1 trillion yuan ($5.5 trillion).

The mobile payments market is controlled by Ant Financial's Alipay, which held a leading 53.8% market share in Q4 2018, and Tencent's WeChat Pay, which, along with fellow Tencent-owned payment service QQ Wallet, commanded a 38.9% share.

Ant and Tencent's combined mobile payments dominance means that other companies need to actively work with or against the powerhouses, especially as they've also stretched into other financial services, including peer-to-peer (P2P) payments, cross-border capabilities, wealth management features, consumer lending, and insurance. 

Payments companies worldwide must take notice of Ant Financial and Tencent's success, strategies, and potential expansion, as they won't succeed in the extremely valuable Chinese market without understanding how the two companies are expanding their reach. And those payments companies settled in other countries should also familiarize themselves with the two companies and their successes, as both have been expanding internationally.

In Fintech Disruptors From The East, Business Insider Intelligence looks at a variety of financial services offered by Ant Financial and Tencent, the different categories they fall under, and the benefits each one offers the firms. We also examine their current strategies for expansion and consider the steps they may take in the future to grow their businesses, both in China and abroad.

The companies mentioned in this report are: Alibaba, Alipay, Ant Financial, Chase, Citcon, First Data, GCash, Go-Jek, Grab, JD.com, Line, Moneygram International, Paytm, QQ, Telenor Microfinance Bank, Tencent, Uber, WeBank, WeChat, WeChat Pay, WeChat Payments Score, Weixin, WeSure, and Wirecard.

Here are some of the key takeaways from the report:

  • Ant Financial and Tencent dominate China's huge mobile payments industry through Alipay and WeChat Pay, and both firms have built cohesive financial ecosystems to further attract consumers and their funds.
  • Generally, Ant Financial's payments and financial services are further developed, but Tencent's huge user base thanks to WeChat has helped it gain ground.
  • Ant and Tencent have expanded their services in Southeast Asia, but Ant appears more interested in further growing its reach.

In full, the report:

  • Examines the financial ecosystems of Ant Financial and Tencent.
  • Analyzes the offerings of Alipay and WeChat Pay as well as how they grew to their current positions atop the Chinese mobile payment market.
  • Details Ant Financial and Tencent's financial features beyond Alipay and WeChat Pay and how they create a more comprehensive slate of offerings.
  • Looks at the expansion of both companies and considers what each may do next, both in China and abroad.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of Ant Financial and Tencent's rapidly expanding array of financial services.

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This is the 19-slide pitch deck two 22-year-olds used to nab $57 million in funding from Silicon Valley

Mon, 09/02/2019 - 3:00pm

Technology is shattering legacy financial systems that can't keep pace with market demand — and Brex is at the forefront. It's one of fintechs buzziest startups, aiming to rebuild B2B financial products starting with corporate cards for technology companies.

The company was quietly launched in 2017 by Henrique Dubugras and Pedro Franceschi, two 22-year-old engineers who previously founded Pagar.me, one of Brazil's largest payment processors.

Brex already has more than 1,000 customers signed up with the help of backing from investors including PayPal co-founders Peter Thiel and Max Levchin, early Facebook investor Yuri Milner, former Visa CEO Carl Pascarella, and esteemed startup incubator Y Combinator.

And we caught a glimpse of the Series B pitch deck Dubugras and Franceschi used to win them over. 

In it, they lay out a clear problem: Technology startups often had trouble securing corporate credit cards — even if they had millions in the bank — because legacy banks and card issuers wanted to see company credit histories, which young institutions simply couldn't produce.

They had a simple solution: Remove the restrictions of legacy technology by giving instant approval to startups based on their available cash balance, including money raised through venture, rather than credit history. 

In the deck, the founders outlined their plans to help startups of all sizes instantly get cards with higher limits, as well as automatic expense management and seamless integration with existing accounting systems.

As part of our coverage of the genesis of today's successful companies, BI Prime received Brex's permission to offer a look into the startup's full 19-slide pitch deck, which includes considerations such as:

  • The startup's mission
  • Key team members and previous backers
  • The size of the market opportunity
  • A step-by-step plan of how to solve credit cards for startups
  • Some of the card's coolest features
  • Data points showing how to scale the business

BI Prime is publishing dozens of stories like this each and every day. Want to get started by reading the full pitch deck?

>> Download it now FREE

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The digital trends disrupting the banking industry in 2019

Mon, 09/02/2019 - 12:30pm
  • Business Insider Intelligence is launching its brand new Banking coverage in early September.
  • To obtain a free preview of our Banking Briefing, please click here.
Banking Industry Overview

The banking industry is in a much healthier place now than it was after the financial crisis of 2008. Total global assets climbed to $124 trillion in 2018, according to The Banker's Top 1000 World Banks Ranking for 2018. 

With so much money to manage, major banks such as JPMorgan Chase, Bank of America, Wells Fargo, and more are releasing new features to attract new customers and retain their existing ones. On top of that, startups and neobanks with disruptive technologies are breaking into the scene, and traditional banks are either competing with them or merging with them to improve their service.

So let's dive into the banking industry, the challenges it faces, and the road ahead.

Banking Industry Trends

The most prevalent trend in the banking industry today is the shift to digital, specifically mobile and online banking (more on each of those in a bit). In today's era of unprecedented convenience and speed, consumers don't want to have to trek to a physical bank branch to handle their transactions. This is especially true of Millennials and the older members of Gen Z, who have started to become the dominant players in the workforce (and the biggest earners).

This digital transformation has led to increased competition from tech startups, as well as consolidation of smaller banks and startups. In 2018, overall fintech funding hit $32.6 billion by the end of Q3, up 82% from 2017's total figure of $17.9 billion, according to CB Insights. 

Mobile Banking

To be frank, mobile banking is all but a requirement for consumers at this point. In Business Insider Intelligence's Mobile Banking Competitive Edge Study in 2018, 89% of respondents said they use mobile banking, up from 83% in 2017.

When broken down by generation, 97% of millennials use it (up from 92% in 2017)  91% of Gen Xers (up from 86%) and 79% of Baby Boomers (up from 69%). Critically for the banks themselves, 64% of mobile banking users said that they would research a bank's mobile capabilities before opening an account, and 61% say they would change banks if their bank offered a poor mobile banking experience.

But we've now reached the point where simply having a mobile app isn't enough for banks to attract and keep customers. Additional tools and features – such as the ability to put temporary holds on cards, view recurring charges, or scanning a fingerprint to log into an account –  are becoming increasingly necessary. Take a look at the chart to the right to see how valuable these features and more are to consumers.

Online Banking

Online banking is extremely convenient, and is understandably one of the two main ways that consumers interact with their banks (along with mobile banking). But there is still a significant contingent of banking customers who want physical branches.

Despite an overwhelming reliance on digital banking channels overall, and the resulting decline in branch visits, consumers have maintained a preference for depositing checks in-branch, according to a recent Fiserv study. More than half (53%) of respondents said their top reason for visiting a branch in the past month was to deposit a check, compared with 41% who went to withdraw cash, and 36% who went to deposit cash.

Still, there's no denying the rising prevalence of online banking, which has led to other innovations such as open banking. This system, implemented in the U.K., involves sharing customers' financial information electronically and securely, but only under conditions that customers approve.

Open banking forces lenders to offer a digital "fire hose" of data that any third party can use to get standardized access — provided the startup is registered with the UK Financial Conduct Authority (FCA) and the customer agrees to share their data.

Investment Banking

Investment banking is a type of financial service in which a person or company advises individuals, businesses, or even governments on how and where to invest their money. For decades, this has been a human-to-human process that led to a mutually beneficial relationship.

But now, with the rise of robo-advisors, artificial intelligence (AI) is starting to infiltrate the money management space. Predictive analytics can help investors make wiser and more profitable decisions before the market moves. AI can, in some cases, also help identify M&A targets. Lastly, AI can help validate an investment banker's hypothesis and lead to more informed future decisions.

Banking as a Service (BaaS)

Because of tight regulations (particularly in the U.S.), not everyone can just open a bank. This is where banking as a service (BaaS) comes in to fill the gap.

BaaS platforms enable fintechs and other third parties to connect with banks' systems via APIs to build banking offerings on top of the providers' regulated infrastructure. So, launching BaaS platforms helps banks benefit from fintechs entering the finance space, as it turns them into customers rather than just competitors.

While BaaS technically falls under the umbrella of open banking, it shouldn't be confused with the aforementioned Open Banking system in the U.K.  Open banking encompasses all actions in which a bank opens its APIs to third parties and gives those players access to data or functionality. The UK's Open Banking focuses on providing third parties with data from incumbent banks, while BaaS looks at how these players can get access to banks' services.

Banking Regulations

Banking is involved in almost every aspect of American life, from consumers to businesses to stocks. Because of this, the federal government has instituted numerous regulations on the banking industry, though the severity of those restrictions has waxed and waned in the last decade.

After the financial crisis of 2008, the Obama administration enacted the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010. Dodd-Frank overhauled the U.S. financial regulation system in the aftermath of the crash. The most sweeping and impactful changes from the act included:

  • The elimination of the Office of Thrift Supervision
  • The creation of the Consumer Financial Protection Bureau (CFPB) to protect consumers against abuses and unfair practices tied financial services and products such as credit cards and mortgages
  • The reassignment of responsibilities for agencies such as the Federal Deposit Insurance Corporation
  • The creation of the Financial Stability Oversight Council and the Office of Financial Research to analyze potential threats to U.S. financial stability
  • The expansion of the Federal Reserve's powers to regulate particular institutions

In 2018, current President Donald Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), which rolled back some of the Dodd-Frank changes. Specifically, EGRRCPA raised the threshold under which the federal government deems banks too important to the financial system to fail from $50 billion to $250 billion.

It also eliminated the Volcker Rule (a federal regulation that largely forbade banks from conducting particular investment activities with their own accounts and restricted their dealings with hedge funds and private equity funds) for small banks with less than $10 billion in assets.

Despite the rollbacks, it's still difficult in the U.S. to get a banking license, which has hampered some banking startups. On the other hand, this has increased mergers and acquisitions activity. As a result, regulation will be a key focal point for the banking industry in the coming years.

Banking Industry Analysis

With so many different facets of the banking industry undergoing change, it's crucial for those connected to the banking industry to be informed and stay ahead. That's why Business Insider Intelligence is launching Banking, our latest research coverage area, to keep you up to date on the latest banking trends and shakeups.

Click here to obtain an exclusive FREE preview of Banking!

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The average US household spends $4,445 on grocery spending. Here's how many points that gets you with 3 popular credit cards

Mon, 09/02/2019 - 12:24pm

According to the Bureau of Labor Statistics expenditure survey, the average American household spent $4,445 on groceries between 2017 and 2018. With so many popular credit cards offering bonus rewards on grocery spending, this is a category that can translate to substantial points or cash back.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.

When you're working to earn credit card rewards, it's important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.

$266 cash back with the Blue Cash Preferred Amex

The Blue Cash Preferred Card from American Express earns 6% cash back at US supermarkets, on up to $6,000 worth of spending per year. After that, all other grocery purchases earn 1% cash back. Considering the average household's annual grocery spending is $4,445, that limitation shouldn't be an issue for most cardholders.

At 6% cash back, the average American household can earn $266.70 worth of cash back on $4,445 grocery spending. That's a pretty substantial amount of cash that can be reinvested into paying household bills — or the next grocery run.

Cash-back rewards are a great choice for people who don't want to spend time researching the best redemption value with different travel programs. It's simple and straightforward.

Click here to learn more about the Blue Cash Preferred card from our partner The Points Guy.

Read more: The best cash-back credit cards

26,670 hotel points with the Hilton Honors Surpass 

The Hilton Honors Surpass card earns 6 points per dollar at US supermarkets. On $4,445 worth of spending, the average household could earn 26,670 Hilton points.

Hilton requires 5,000 to 95,000 points for a standard award night. With 26,670 points, you could cover one to five free nights at a Category 1-4 hotel. Check out the Hilton Points Explorer for an idea of the types of hotels you could book with 26,670 Hilton points.

Click here to learn more about the Hilton Honors Surpass card from our partner The Points Guy. 17,780 points with the American Express Gold Card

The Amex Gold Card is popular thanks to generous bonus categories and statement credits for dining. Cardholders earn 4 points per dollar on up to $25,000 per year at US supermarkets (then 1 point per dollar). The 17,780 points earned from $4,445 in annual grocery spending can add up to quite a lot of rewards, depending on how you use them.

Amex Membership Rewards points transfer to 19 airlines and three hotel programs. With 17,780 points transferred to Virgin Atlantic Flying Club, you could book a one-way economy-class ticket between the East Coast and London — and still have 7,680 points to spare. That's the cheapest transcontinental flight you can book using points and miles.

British Airways is another great transfer option. The airline's awards are based on the flight distance, which can work out great depending on where you travel to. For example, a one-way flight between the West Coast and Hawaii is just 12,500 miles in economy class. If you're traveling during the off-season, you can score tickets between the East Coast and Ireland for just 13,000 miles one-way.

Click here to learn more about the Amex Gold card from our partner The Points Guy. The best option

The best credit card for grocery spending really depends on your goals. With reward programs getting devalued all the time, cash back is becoming more valuable. It provides redemption flexibility and isn't subject to blackout dates or devaluations.

Bank rewards currencies like Amex Membership Rewards points remain solid alternatives. There's more potential to maximize these points through premium travel redemptions or take advantage of sweet spot pricing. With so many transfer partner options and the ability to redeem points for statement credits, the possibilities are endless.

Read more: The best rewards credit cards

SEE ALSO: All our credit card reviews — from cash-back to travel rewards to business cards — in one place

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NOW WATCH: How Area 51 became the center of alien conspiracy theories

SMB LENDING REPORT: How alt lenders are providing SMBs with new funding options, and the ways incumbents can respond to stay ahead

Mon, 09/02/2019 - 12:00pm

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. Current subscribers can read the report here.

Small- and medium-sized businesses (SMBs) are vital creators of wealth, income, and jobs in the global economy. For example, they make up 99.9% of all private sector businesses in both the US and the UK, and they employ 60% and 48% of all workers in those countries, respectively.

The income and assets of these businesses make them an irreplaceable customer base for financial institutions. However, incumbent financial institutions are falling short of SMBs' lending wants and needs.

Fintechs — including alt lenders, payment providers, and lending platforms — are changing the SMB lending space by filling that gap and capturing an increasingly large sliver of the SMB lending market. For example, alternative financial providers only accounted for 2%, or £11.5 billion ($14.7 billion), of the UK SMB lending market in 2018. However, their share is projected to surge to 9.1%, worth £52.6 billion ($67.4 billion), by 2021.

In the SMB Lending Report, Business Insider Intelligence will examine the key players in the SMB lending space, determine the advantages of each player, and discuss how incumbents can improve their offerings to better serve SMBs and stave off the growing competition from alt lenders in the space. Additionally, we will look at what the future of SMB lending will hold.

The companies mentioned in this report are: NatWest, BNP Paribas, Esme Loans, OnDeck, ING, Kabbage, Funding Circle, Lending Club, PayPal, Square, Lendio, ING, Funding Options, INTRUST Bank, Behalf, Lending Express, and Fundbox, among others.

Here are some of the key takeaways from the report:

  • SMBs are underserved by conventional lenders, so fintechs are increasingly offering digital services tailored to meet SMBs' wants and needs.
  • Some incumbents have already woken up to the opportunity of better serving SMBs and leveraging this revenue stream, but the majority are still unaware.
  • This has given fintechs the opportunity to grow their market share among SMBs. If incumbents don't fight back with their own digital services, they will like lose further share to fintechs. 
  • There are three main ways incumbents can revamp their SMB lending products, each of which requires a different level of effort: partnering with fintechs, developing tech-enabled solutions in-house, or launching their own challenger products. 

 In full, the report:

  • Outlines the current state of the SMB lending space.
  • Details the different players that are involved in SMB lending.
  • Explains three ways in which incumbents can up their SMB lending game and fight off competition.
  • Highlights the benefits and hurdles that come with each of those strategies.
  • Discusses what the future of the SMB lending space will hold.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >>Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of SMB lending.

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Hurricane Dorian is set to wreak havoc on air travel — here's what you need to know about flights

Mon, 09/02/2019 - 11:45am

  • Hurricane Dorian is on track to reach the continental United States in the next several days.
  • Air travel is likely to be severely affected, regardless of the storm's exact track, and flights across the US could be delayed or canceled.
  • Airlines including American, Alaska, Delta, JetBlue, Frontier, Southwest, Spirit, and United have issued travel waivers letting some affected passengers change their flights without any fees. Scroll down for details on the waivers, and check back here for updates.
  • Visit Business Insider's homepage for more stories.
A dangerous tropical storm in the Caribbean strengthened Wednesday to become Hurricane Dorian.

The Category 5 hurricane caused "unprecedented" damage in the Bahamas over the weekend, according to the Bahamian Prime Minister, and is expected to make landfall in the continental US as a "major hurricane" — Category 3 or stronger — at some point between Monday evening and Tuesday morning, according to the National Hurricane Center.

While the storm was initially forecasted to slam into the Florida coast, shifts over the weekend led to uncertainty about its exact course and suggested it would move further north, possibly remaining off the coast.

However, the slightest shift in track could lead to "catastrophic" impact in Florida, and regardless of where the storm's eye makes landfall — or whether it does at all — it's likely that most of the South-East will feel tropical storm and hurricane-strength winds.

Air travel is expected to be impacted, though as in many cases of severe weather, effects could ripple across the US as aircraft are repositioned or delayed because of the storm.

American, Alaska, Delta, Frontier, JetBlue, Southwest, Spirit, and United have issued travel waivers, allowing people with flights that may be directly affected to change their itineraries without a fee. 

Those waivers initially applied mostly to airports in Florida and the Caribbean, although airlines extended waivers to cover parts of Georgia and the Carolinas.

Multiple airlines also announced it would waive pet-in-cabin and baggage fees on flights from certain airports in order to help with evacuations.

Orlando, Fort Lauderdale and Palm Beach International airports planned to suspend operations at noon on Monday, leading to hundreds of cancelled flights into or out of Florida, according to data from FlightAware, with more than 1,000 flights cancelled nation-wide.

Scroll down for full details, and keep checking this article — we'll be updating it as necessary.

If you're traveling this weekend, check this page for updated travel waiver information.

SEE ALSO: British Airways pilots plan to strike over 3 days in September, throwing air travel into chaos

American Airlines

Passengers flying to or from or connecting through the following airports on August 29-September 4 are eligible for travel waivers:

  • Daytona Beach, FL (DAB)
  • Fort Lauderdale, FL (FLL)
  • Fort Myers, FL (RSW)
  • Gainesville, FL (GNV)
  • Jacksonville, FL (JAX)
  • Key West, FL (EYW)
  • Melbourne, FL (MLB)
  • Miami, FL (MIA)
  • Orlando, FL (MCO)
  • Sarasota / Bradenton, FL (SRQ)
  • Tallahassee, FL (TLH)
  • Tampa, FL (TPA)
  • West Palm Beach, FL (PBI)

The waiver applies as long as you reschedule your flight for August 29 to September 10 and between the same cities and in the same cabin.

Passengers traveling through the following airports on September 1–7 are also eligible for waivers, as long as travel is rescheduled for September 1–15:

  • Charleston, SC (CHS)
  • Greenville, NC (PGV)
  • Hilton Head, SC (HHH)
  • Jacksonville, NC (OAJ)
  • Myrtle Beach, SC (MYR)
  • New Bern, NC (EWN)
  • Savannah, GA (SAV)
  • Wilmington, NC (ILM)

Passengers traveling through the following airports on August 30-31 are also eligible for waivers, as long as travel is rescheduled for August 28–September 7:

  • Freeport, Bahamas (FPO)
  • George Town, Bahamas (GGT)
  • Marsh Harbour, Bahamas (MHH)
  • Nassau, Bahamas (NAS)
  • Providenciales, Turks and Caicos Islands (PLS)

Also, passengers traveling to, from, or through the following airports August 26-29 are eligible for travel waivers under the same terms (as long as they rebook their flights for August 26 to September 5):

  • Bridgetown, Barbados (BGI)
  • Cap Haitien, Haiti (CAP)
  • Fort de France, Martinique (FDF)
  • Port Au Prince, Haiti (PAP)
  • Puerto Plata, Dominican Republic (POP)
  • Punta Cana, Dominican Republic (PUJ)
  • San Juan, Puerto Rico (SJU)
  • Santiago, Dominican Republic (STI)
  • Santo Domingo, Dominican Republic (SDQ)
  • St. Lucia, Saint Lucia (UVF)

You can also cancel any eligible flights and get a refund in the form of a travel voucher, good for one year from the date you originally purchased the ticket.

To change your flight, contact airline reservations at 800-433-7300, or make the change online yourself by clicking "change trip" when you pull up your flight details.



Delta

Travel waiver applies for passengers flying to or from or connecting through the following airports on September 1–7:

  • Brunswick, GA (BQK)
  • Charleston, SC (CHS)
  • Fayetteville, NC (FAY)
  • Hilton Head, SC (HHH)
  • Jacksonville, NC (OAJ)
  • Myrtle Beach, SC (MYR)
  • New Bern, NC (EWN)
  • Savannah, GA (SAV)
  • Wilmington, NC (ILM)

The full waiver applies as long as you reschedule your flight for a date on or before September 15 between the same cities and in the same cabin. You can reschedule your flight for later — as long as it's within a year of the original purchase date — but you may have to pay a fare difference.

You can also cancel your flight and get a refund in the form of a credit. You'll have to use the credit to purchase a new ticket for travel within a year of the original purchase date.

There's also a waiver for passengers flying to or from or connecting through the following airports on August 30–September 4:

  • Daytona Beach, FL (DAB)
  • Fort Lauderdale, FL (FLL)
  • Fort Myers, FL (RSW)
  • Gainesville, FL (GNV)
  • Jacksonville, FL (JAX)
  • Key West, FL (EYW)
  • Melbourne, FL (MLB)
  • Miami, FL (MIA)
  • Orlando, FL (MCO)
  • Sarasota/Bradenton, FL (SRQ)
  • Tallahassee, FL (TLH)
  • Tampa, FL (TPA)
  • Valdosta, GA (VLD)
  • West Palm Beach, FL (PBI)

For the full waiver to apply, flights must be rescheduled for a date on or before September 10 between the same cities.

The airline is also waiving all pet-in-cabin and baggage fees from the following airports from August 30–September 4, to help people looking to evacuate:

  • Daytona Beach, FL (DAB)
  • Fort Lauderdale, FL (FLL)
  • Jacksonville, FL (JAX)
  • Melbourne, FL (MLB)
  • Miami, FL (MIA)
  • Orlando, FL (MCO)
  • West Palm Beach, FL (PBI) 

A travel waiver is in place for the following airports for travel between August 26-29, as long as travel is rebooked for September 5 or earlier:

  • Punta Cana, Dominican Republic (PUJ)
  • Port Au Prince, Haiti (PAP)
  • San Juan, Puerto Rico (SJU)
  • Santiago, Dominican Republic (STI)
  • Santo Domingo, Dominican Republic (SDQ)
  • St. Lucia, Saint Lucia (UVF)
  • St. Thomas, Virgin Islands (STT)

Also, passengers traveling to, from, or through the following airports August 30-31 are eligible for travel waivers under the same terms (as long as they rebook their flights for September 7 or earlier):

  • George Town, Bahamas (GGT)
  • Marsh Harbour, Bahamas (MHH)
  • Nassau, Bahamas (NAS)
  • Providenciales, Turks and Caicos Islands (PLS)

To change your flight, click "My Trips" in the Delta app or on the website.



JetBlue

Travel waiver applies for passengers flying to or from or connecting through the following airports September 4–5:

  • Charleston, SC (CHS)
  • Savannah, GA (SAV)

Flights must be rebooked September 13 or earlier between the same cities and in the same cabin for the waiver to apply.

There's also a waiver in place for these airports August 30 to September 3:

  • Fort Lauderdale, FL (FLL)
  • Fort Myers, FL (RSW)
  • Jacksonville, FL (JAX)
  • Orlando, FL (MCO)
  • Palm Beach, FL (PBI)
  • Sarasota, FL (SRQ)
  • Tampa, FL (TPA)

Travel must be rebooked for September 10 or earlier.

The waiver also applies for passengers traveling to, from, or through these cities August 28-29:

  • Aguadilla, Puerto Rico (BQN)
  • Ponce, Puerto Rico (PSE)
  • San Juan, Puerto Rico (SJU)
  • St. Thomas, Virgin Islands (STT)

The waiver applies as long as you reschedule your flight for a date through September 1.

And these cities August 30–September 2, as long as travel is rebooked for September 7 or earlier:

  • Nassau, Bahamas (NAS)

To change your flight, contact airline reservations at 800-538-2583, or make the change online yourself by clicking "manage flights" when you pull up your flight details.

If your flight ends up being canceled, you can also opt for a full refund.



United

Travel waiver applies for passengers flying to or from or connecting through the following airports August 29-September 4:

  • Fort Lauderdale, FL (FLL)
  • Fort Myers, FL (RSW)
  • Jacksonville, FL (JAX)​
  • Key West, FL (EYW)​
  • Miami, FL (MIA)​
  • Nassau, Bahamas (NAS)​
  • Orlando, FL (MCO)​
  • Sarasota, FL (SRQ)​
  • Tampa, FL (TPA)​
  • West Palm Beach, FL (PBI)​

For the waiver to apply, travel must be rescheduled between August 29 and September 11.

You can also reschedule your flight for after September 11, or change your departure or destination city — the change fee will still be waived, but you may have to pay a fare difference. Rescheduled travel has to be completed within a year of the date you bought the ticket.

There's also a waiver in place for the following cities if you're scheduled to travel September 2–7:

  • Charleston, SC (CHS)
  • Hilton Head Island, SC (HHH)​
  • Myrtle Beach, SC (MYR)
  • Savannah, GA (SAV)
  • Wilmington, NC (ILM)

Flights must be scheduled for September 2–14 for the full waiver to apply.

Also, if you're scheduled to travel to, from, or through the following airports from August 28-29:

  • Aguadilla, Puerto Rico (BQN)
  • Punta Cana, Dominican Republic (PUJ)​
  • San Juan, Puerto Rico (SJU)

The full waiver applies as long as you reschedule your flight for anytime by September 1 between the same cities and in the same cabin.

To change your flight, contact airline reservations at 800-864-8331 or make the change online yourself through the United website or app.



Southwest

Travel waiver applies for passengers flying to or from or connecting through the following airports August 26-30:

  • Providenciales, Turks and Caicos Islands (PLS)
  • Punta Cana, Dominican Republic (PUJ)
  • San Juan, Puerto Rico (SJU)

And the following airport on August 27 to September 5:

  • Nassau, Bahamas (NAS)

And these airports August 31 to September 5:

  • Fort Lauderdale, Florida (FLL)
  • Fort Myers, Florida (RSW)
  • Jacksonville, Florida (JAX)
  • Orlando, Florida (MCO)
  • Tampa, Florida (TPA)
  • West Palm Beach, Florida (PBI)

And the following airport September 1-6:

  • Charleston, SC (CHS)

The waiver applies as long as you reschedule your flight for anytime within 14 days of the original travel date between the same cities and in the same cabin.

Southwest also said it would waive pet-in-cabin fees for passengers evacuating from those cities.

To change your flight, contact airline reservations at 800-435-9792, or make the change online yourself by using the Southwest app or website.



Frontier Airlines

Travel waiver applies for passengers flying to or from or connecting through the following airports August 26-30:

  • Punta Cana, Dominican Republic (PUJ)
  • San Juan, Puerto Rico (SJU)

Affected passengers can make one change. The waiver applies as long as you reschedule your flight for anytime on or before September 20 — passengers are allowed to change their origin or destination cities.

Frontier issued an additional travel waiver passengers traveling to, from, or through the following airports on September 1-4:

  • Fort Lauderdale, FL (FLL)
  • Fort Myers, FL (RSW)
  • Jacksonville, FL (JAX)
  • Miami, FL (MIA)
  • Orlando, FL (MCO)
  • Sarasota, FL (SRQ)
  • Tampa, FL (TPA)
  • West Palm Beach, FL (PBI)

For the waiver to apply, travel must be rescheduled for no later than September 28.

If your flight is cancelled outright, you can choose to request a refund instead of a rescheduled flight.

To change your flight call reservations at 801-401-9000.



Spirit Airlines

Travel waiver applies for passengers flying to or from or connecting through the following airports August 27-30:

  • Aguadilla, Puerto Rico (BQN)
  • Port-au-Prince, Haiti (PAP)
  • Punta Cana, Dominican Republic (PUJ)
  • Santo Domingo, Dominican Republic (SDQ)
  • San Juan, Puerto Rico (SJU)
  • Santiago, Dominican Republic (STI)

The full waiver applies as long as you reschedule your flight for travel on or before September 5 between the same cities.

Change fees will still be waived if you reschedule for a later date, but you may have to pay a fare difference.

The travel waiver also applies for passengers traveling to, from, or through the following airports on August 31–September 3:

  • Fort Lauderdale, FL (FLL)
  • Jacksonville, FL (JAX)
  • Orlando, FL (MCO)
  • Tampa, FL (TPA)

Fees and fare differences are waived as long as those passengers rebook to travel by September 18.

Spirit has also added a waiver for the following city for travel scheduled September 2–6:

  • Myrtle Beach, SC (MYR)

Fees and fare differences are waived as long as those passengers rebook to travel by September 18.

To change your flight, visit the "manage travel" page and enter your flight information, or call reservations at 801-401-2222.



Alaska Airlines

Passengers flying to or from or connecting through the following airports on September 1-4 are eligible for travel waivers:

  • Fort Lauderdale, FL (FLL)
  • Orlando, FL (MCO)
  • Tampa, FL (TPA)
  • Charleston, SC (CHS)

The waiver applies as long as you reschedule your flight for August 29 to September 11 and between the same cities and in the same cabin.

You can also cancel your flight and receive credit for a future trip.

To change your flight, go to Alaska's "Change My Flight" or "Cancel My Flight" pages, or contact the travel agent who booked your tickets.



Read the pitch deck that helped Divvy raise $30 million to provide alternate financing for prospective homebuyers

Mon, 09/02/2019 - 11:00am

Buying a home, particularly for Millennials, is a complicated and expensive process – at times it can be complicated and expensive enough to discourage potential buyers from even trying.

Enter Divvy, one of the many Silicon Valley startups working to change the way people buy homes. The company is specifically interested in providing alternative financing options for prospective homebuyers who don't qualify for traditional mortgages.

Divvy accomplishes this by purchasing homes outright and allowing customers to pay the company back through monthly installments — 25% of the total goes toward building equity and 75% goes toward paying "rent."

And some top venture capitalists have bought into Divvy's mission as well. In October 2018, Divvy raised a $30 million series A round led by Andreessen Horowitz, with participation from Caffeinated Capital, DFJ, and Affirm CEO Max Levchin.

Divvy helped purchase homes for more than 100 buyers in its first year, but it has much higher hopes. The startup's official mission is to put 100,000 families into their first homes within five years.

To really understand Divvy's strategy, Business Insider Prime has published the investor deck the company used to acquire that $30 million in funding. Simply enter your email address to receive a FREE download of the full deck!

BI Prime is publishing dozens of stories like this each and every day, chock full of exclusive content and industry analysis. Get started by reading the full investor deck.

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Spooked traders just sent gold to a 6-year high after yet another warning on a slowdown in global trade

Mon, 09/02/2019 - 10:28am

  • Worried investors are plowing into gold due to global uncertainty in markets. 
  • Meanwhile, global trade has continued to slow down due to the trade war, falling a third consecutive quarter in Q2. 
  • Analysts have said that investors are running out of havens as US treasury bond yields are so low. 
  • Watch gold trade live.
  • View Markets Insider's homepage for more stories. 

Worried investors have been plowing into gold as political uncertainty plagues markets, sending the haven asset to the highest since 2013.

Analysts say that this is a worrying sign of the effect of the trade war, as spooked investors run out of safe havens.

"Investors have piled into gold because, fundamentally, they are worried about the state of the global economy," said Neil Wilson, chief market analyst at Markets.com to Markets Insider in an email. 

CPB's world trade monitor also showed that world trade had fallen for a third consecutive quarter, dropping by 0.7%, as June fell by 1.4% month on month. 

"They've also piled into bonds for the same reason – yields have come right down and this depression of yields is really what matters for gold," Wilson added.

US bond yields have been a major talking point for investors recently. The yields for the 2-month Treasury and the 10-year Treasury have inverted, a big red flag for a looming recession. 

As Markets Insider's Carmen Reineke reported last week: Investors are "struggling to find solid returns in an environment where yields are low all around." The yield curve's inversion — which has come before every recession since 1950 — "has increased investor panic," she wrote. "That, in turn, has driven the bond rally further and dragged yields lower." 

See More: The yield curve is inverted. Here's what that means, and what the implications are for the economy.

Added Wilson: "Real yields in the US have fallen to about zero which has made gold especially appealing given that the opportunity cost to holding gold as a hedge is about zero."

"So while sometimes you see gold as a safe haven play, it doesn't really work or last when yields are higher – the drop in yields has really been the key."

Investors have also been putting their money into bitcoin for similar reasons, according to analysts at eToro. The e-trading platform said it saw a 284% surge in bitcoin trades in the last three months, compared to the three months before that. 

See More: Investors have been plowing money into bitcoin since the start of the US-China trade war 

SEE ALSO: Investors have been plowing money into bitcoin since the start of the US-China trade war

Join the conversation about this story »

NOW WATCH: Most hurricanes that hit the US and Caribbean islands come from the same exact spot in the world

China stocks soar on Beijing's vow to prop up its economy as Trump's tariffs kick in, hitting billions' worth of goods

Mon, 09/02/2019 - 10:25am

  • Beijing signaled measures intended to keep its economy afloat as a fresh round of tariffs on US and Chinese goods kicked in this week.
  • Chinese and European equities jumped. US futures fell as American markets were closed for the Labor Day holiday.
  • The Trump administration slapped tariffs of 15% on $112 billion worth of Chinese goods on Sunday, and China retaliated with the first of two batches of duties targeting $75 billion worth of US goods.
  • "The outlook does not look positive for a deal any time soon," one analyst said.
  • View Markets Insider's homepage for more stories.

Chinese stocks jumped Monday after Beijing signaled measures intended to keep its economy afloat as a fresh round of tariffs on US and Chinese goods kicked in this week.

The State Council's financial stability and development committee described risks to the economy as manageable and said the state wanted to keep "reasonably ample" liquidity as it faced the brunt of the trade war, according to Bloomberg. The committee was at a conference chaired by Vice Premier Liu He, Bloomberg said.

European equities jumped while US futures fell. Markets were closed in the US for the Labor Day holiday. Stocks in Hong Kong and Japan slid.

The Trump administration slapped tariffs of 15% on $112 billion worth of Chinese goods including footwear, apparel, and Apple Watches on Sunday, and it plans to roll out duties on a further $160 billion in Chinese products such as laptops and cellphones in mid-December.

The Chinese government retaliated by rolling out the first of two batches of tariffs targeting $75 billion worth of US goods. It hiked the price of importing American pork, beef, chicken, and agricultural goods, and it plans to ramp up tariffs on soybeans to 30% in mid-December from 25%.

Trade representatives from the world's two biggest economies will hold talks this month, President Donald Trump told reporters on Sunday, according to Bloomberg. Yet the US president struck a defiant tone, signaling the yearlong dispute wouldn't be easily settled. "We can't allow China to rip us off anymore," he said.

Analysts aren't optimistic the two sides can reach a resolution.

"Trade and tariffs continue to gnaw away at investor confidence," Neil Wilson, the chief market analyst for Markets.com, said in a morning note. "The outlook does not look positive for a deal any time soon."

Meanwhile, a positive set of Chinese economic data could persuade authorities to hold out for an attractive deal. Chinese manufacturing activity increased in August, according to the latest reading from the Caixin Purchasing Managers' Index, which rose from 49.9 in July to a five-month high of 50.4.

More government stimulus might be necessary to sustain the revival.

"China's economy showed signs of a short-term recovery, but downward pressure remains a long-term problem," Dr. Zhengsheng Zhong, the director of macroeconomic analysis at CEBM Group, said in a statement. "Amid unstable Sino-American relations, China needs to step up countercyclical policies."

Here's the market roundup as of 10:20 a.m. in New York:

  • European equities were broadly higher, with Britain's FTSE 100 up 1.2% and Germany's DAX and the Euro Stoxx 50 up 0.1%.
  • Asian indexes were mixed, with China's Shanghai Composite up 1.3% and Japan's Nikkei down 0.4%. Hong Kong's Hang Seng slumped 0.4% after protesters clashed with the police at the territory's main airport and forced roads to close.
  • US stock markets were closed for Labor Day. Futures fell, with those underlying the Dow Jones Industrial AverageS&P 500 and Nasdaq down about 0.3%.
  • Oil prices fell with West Texas Intermediate crude down 0.4% at $54.90 a barrel and Brent crude down 0.8% at $58.80.
  • Gold inched up 0.3% to $1,534. The haven asset is hovering at its highest level since 2013.

SEE ALSO: It looks like Trump lied about the trade war to boost stock markets — his bluster may soon start falling on 'deaf ears'

Join the conversation about this story »

NOW WATCH: This is the shortest route for a road trip across the US to see 50 national landmarks

See inside Amtrak's luxurious new train cars that are the closest thing to European rail the US has yet seen

Mon, 09/02/2019 - 9:10am

  • Amtrak's newest trains are set to arrive in 2021 and will be put to work on the Acela service from Boston to Washington, DC.
  • The operator previewed the cars' interiors this week — and they look plenty luxurious.
  • In addition to bigger, more comfortable seats, the café car and bathrooms have also been upgraded. 
  • Visit Business Insider's homepage for more stories.

When Amtrak's newest Acela trainsets arrive in 2021, not only will travelers get a faster trip between Boston, New York, and Washington D.C., but a more posh interior as well.

The agency showed off the new cars' upgraded interiors this week at its headquarters in Delaware, where the tour included mock-ups of both business and first-class, as well as the cars' bathrooms, galley, and driver's cab.

"The new trains will provide world-class accommodations and amenities, along with a smoother and even more comfortable ride," Amtrak said in a press release. "The trainsets are being manufactured at Alstom's Hornell, NY, facility and each trainset will offer more seating capacity with 378 seats to offer the spacious, high-end comfort our customers expect."

Here's a look inside:

SEE ALSO: I spent 23 hours on an Amtrak train from Orlando to New York — and it was a roller-coaster experience with extreme highs and lows

Each car will have 25% more seats than before, Amtrak says. Sleek new overhead luggage racks and digital signage add to the futuristic look.

Every seat has a personal power outlet for charging phones, computers, and other devices. There are also USB ports and individual reading lights.

No more reaching over your seatmate to get to the inconvenient outlet.



The seats are made from recycled leather. Winged headrests, not unlike those on some planes, make it easier to fall asleep.

Double tray tables make it easy to customize your seat for working, eating, or anything else.

If you've ever tried to walk down the aisle of a bumpy train, you'll be thankful for the new seat-top handles.

The passengers who avoid being spilled on will probably like them too.



The Cafe Cars have been upgraded, too. No more waiting in lines that extend to the next car.

Here's a behind-the-counter look at the new prep space, as well as a digital menu board.

And if you're tired of sitting, the new "nest area" features hip rests and a bar-like counter for drinks and food.

Say goodbye to touching gross bathroom fixtures: new lavatories feature all touch-less technology as well as changing tables for traveling families.

In order to achieve higher speeds on the US' antiquated infrastructure, the new Acela trains have a "tilting technology" so the forces around curves aren't as jarring.

Read more about Amtrak's Acela Express:

Amtrak is launching a new express train between New York and Washington DC that could help it steal even more passengers from airlines in the Northeast



Goldman Sachs says Argentina faces a 'longer and deeper recession' after a month from hell. Here's why things could get as bad as 2001's crisis.

Mon, 09/02/2019 - 8:01am

  • Amid political uncertainty, Argentina is in the midst of economic crisis after S&P indicated that the country was in selective default.
  • Goldman Sachs warned that its outlook for the country was turning more bearish. Goldman expects Argentina's gross domestic product to contract by 3.2% this year and by another 1.6% in 2020, "totaling three consecutive years of recession."
  • The bank also sees inflation declining at a slower pace.
  • Argentine bond yields have spiked, and the country's currency is plummeting.
  • "Things in Argentina are likely will get worse," Pantheon Macroeconomics predicted.
  • Click here for more BI Prime stories.

In just a few weeks, Argentina has gone from a plucky country on the long road to economic recovery to a pariah in global markets.

The country had been steadily attempting to improve its difficult economic situation under President Mauricio Macri over the past few years, but shock election results on August 11 saw a rise in support for the opposition challenger Alberto Fernández and his running mate, former President Cristina Fernández de Kirchner.

The August vote result spooked investors — the peso plunged 36% against the dollar, the Argentine stock market has halved in value, and investors have fled government bonds, sending yields spiking.

This week, the country imposed currency controls, deepening concerns about Argentina's economy amid a terrible month. That brought back painful memories of 2001, when Argentina defaulted on $93 billion worth of sovereign debt, the largest on record.

But even before the capital controls, Goldman Sachs warned that its outlook for the country was turning more bearish.

In a note dated August 30, analysts led by Tiago Severo said they expected "a longer and deeper recession amidst higher inflation" — saying Argentina's economic slump was likely to be the longest since the country's disastrous default in 2001.

Goldman expects Argentina's gross domestic product to contract by 3.2% this year and by another 1.6% in 2020, "totaling three consecutive years of recession." The bank also sees inflation declining at a slower pace, "reaching 50% by end-2019 and tracking above 40% during the first half of 2020, with risks skewed to the upside."

Investors are worried. The cost of insuring bond debt against default in Argentina has boomed to 3,600 basis points — 360% — on a five-year credit default swap, an insurance product designed to protect bond holders, an increase of 93%. The implied probability of default is now 92%, which could have a major impact on global investors.

S&P also indicated that the country was now in selective default despite Argentina's $57 billion loan agreement with the International Monetary Fund, which was the fund's largest outlay to date when agreed a year ago.

Read more: Argentina just brought in currency controls to contain the peso after it lost more than a quarter of its value in a month

"Things in Argentina are likely will get worse, even with IMF support, and the country will struggle to access to international markets," said Andres Abadia, a senior international economist at Pantheon Macroeconomics.

'They are not measures for a normal country'

Further deterioration would be likely to cause any remaining investors to flee as Argentina desperately tries to restore order. The IMF announced it would provide an additional $5.4 billion to the country. Inflation is flashing red at 22% for the first half of the year.

The central bank has spent nearly $1 billion in reserves since Wednesday, according to Reuters.

"Increased political and policy uncertainty and the large dislocation of broad financial conditions will likely weigh on the economic outlook, almost certainly reversing the tentative stabilization of activity and the somewhat more palpable decline in inflation observed in recent months," Goldman Sachs analysts said.

The Argentine government has hiked short-term interest rates to almost 80% and has moved to unilaterally reclassify the maturities of its short-term debts, a move that is likely to cause concerns among investors.

The country's economic minister, Hernan Lacunza, called the measures "uncomfortable" but indicated that without them there would be serious consequences. "They are not measures for a normal country," he said, according to Reuters, citing a radio interview Sunday night.

Even with continued international support, the Argentine economy is walking a tightrope. The country's sovereign default in 2001 still lingers in the minds of investors with the stark possibility of a new populist government coming to power in October, only amplifying concerns.

SEE ALSO: Investors spooked by the trade war are running out of places to hide. Goldman Sachs says they should pile into stocks that act like bonds.

Join the conversation about this story »

NOW WATCH: Nxivm leader Keith Raniere has been convicted. Here's what happened inside his sex-slave ring that recruited actresses and two billionaire heiresses.



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