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Challenging economic outlook: The threat of a recession and rising inflation have forced banks to increase their loan loss provisions鈥攖aking a chunk out of their profits. The economic outlook remains uncertain, as it鈥檚 unclear whether the Fed will continue to fight inflation with rising interest rates or reverse course. Banks may soon see their net interest income lifeline run dry. Will it work?

And the proliferation of BNPL entrants鈥攎any of which target specific sectors like travel or healthcare鈥攎ay exacerbate concerns that consumers could inadvertently fall into unmanageable debt. This article originally appeared in Insider Intelligence's Payments Innovation Briefing鈥攁 daily recap of top stories reshaping the payments industry.

With home sales falling as mortgage rates increase鈥攁nd renters staying put as their housing costs rise鈥擶ayfair and other furniture retailers face a difficult 2023. The big takeaway: Retail bankruptcies were few and far between in 2022, but that could change in 2023 as market pressures cause investors to choose sure bets over loss-making enterprises.

Over a hundred million Americans, as you note, saddled with medical debt. A quarter of them owe over $5,000, according to a 2022 KFF Health News analysis. Rajiv Leventhal:. And that's because healthcare is so expensive, so of course debt is going to be piling up. The average working American cannot pay for all of their medical bills if they're sick. Lisa Phillips:.

Other businesses like commercial real estate, mortgages and consumer lending, small enterprise banking, and slowing deposits contributed to regional banks鈥� struggles. How do fintechs fit into the solution? Some regional banks have invested heavily in fintechs to stay competitive in an evolving landscape. Huntington National, First Horizon, and Regions participated in ModernFi鈥檚 Series B round.

For example, in 2022, PepsiCo launched 鈥渕yeducation,鈥� which enables employees to upskill and reskill through specific interventions and paths, including certificates, bachelor鈥檚 degrees, and programs in trades like machine and maintenance mechanics, all without going into debt. We also have a digital ambassador program that helps drive digital literacy.

In May 2022, Goldman Sachs offered its first bitcoin-backed loan, and expanded the ability shortly after to all of its institutional clients. In June 2022, it began offering institutional clients an Ether-linked forward derivative. Our take: US regulators have been slow to regulate the crypto markets, and thus far they鈥檝e only used enforcement to dictate what鈥檚 right and what鈥檚 wrong.

More than 35% of households used credit cards or loans in December to cover spending needs in the past week, up from around 32% in November and just 21% in April 2021, when the US Census Bureau began collecting the data. The big takeaway: It鈥檚 important to take a big picture perspective when looking at the current retail landscape.

The big takeaway: A significant share of US households are feeling pinched to make ends meet; more than 35% of households used credit cards or loans in December to cover spending needs in the past week, up from around 32% in November and just 21% in April 2021, when the US Census Bureau began collecting the data.

The announcement comes shortly after Amazon revealed it had obtained an $8 billion unsecured loan to help shore up its business amid global macroeconomic headwinds, per an SEC filing. How we got here: The expanded cuts are Amazon鈥檚 latest attempt to get costs under control after embarking on an overly optimistic course of rapid expansion during the first two years of the pandemic.

Let me make sure I've got the math on that, divided by ... yeah, about one in seven Americans who have student loan debt and the average federal student loan debt balance is $38,000. Blake Droesch (26:05):. Yeah.

Their disposable income is being hit hardest by the record-high inflation making consumers more cost-conscious鈥攚hile outstanding loans are piling up thanks to ever-increasing interest rates. Credit card providers will look to attract these consumers to their lower-tier and nonpremium cards. Here鈥檚 how marketing and product teams will align to meet their current needs:.

And more than 2 in 5 BNPL customers have had to borrow money to repay their BNPL loans, per Citizens Advice. The UK鈥檚 cost-of-living crisis has only exacerbated BNPL affordability and debt concerns: Among current and prospective BNPL users, 27% said inflation played a role in deciding to use BNPL. Another 29% blamed their inability to afford the purchase price.

And going back to your first point, Arielle, about debt and spending, Gen Z actually has the fastest growing credit card debt of all generations. This is per Credit Karma data. However, they still have the overall lowest amount of debt. Obviously they're younger, but they're catching up. Arielle Feger:. Yeah. Sara Lebow:.

As rising credit card debt heightens the chances of defaults, building services for more affluent customers should help offset those risks. Attracting wealthier customers should also help Revolut shore up its bottom line: Neobanks鈥� inability to turn a profit is a pervasive problem, with less than 5% breaking even, per Simon-Kucher & Partners.

Charging fees for responding to customer inquiries鈥攊ncluding balance inquiries, loan payoff amounts, or requests for specific supporting documents like check images or original account agreements鈥攃ould be seen as unreasonable and a potential violation.

The news: Now that First Citizens Bank has purchased Silicon Valley Bank鈥檚 remaining deposits and loans, questions are arising around what will happen to SVB鈥檚 established $11.2 billion community benefits plan, per American Banker. Plan details: SVB Financial Group negotiated the community benefits plan when it purchased Boston Private Financial Holdings in July 2021.

Consumer spending remains relatively strong, but credit card balances are on the rise. As interest rates rise, consumers may find themselves a bit too far under water. The Fed has also positioned the banking sector's shakiness as acting similarly to a rate increase.

More than half (57%) of respondents said smartphones and computers are equally secure for conducting financial transactions. 61% of those surveyed said they access their bank accounts on smartphones, and 52% said they use them to pay bills, rent, and loans. 71% of consumers polled said they use their smartphones more than any other device to send and receive money between friends and family.

We expect rising loan defaults and falling swipe fee revenues to hurt the embedded finance industry, even as it benefits from more lucrative margins on lending and credit appetite during challenging economic times. Regulators will circle as risky partnerships sting providers. We expect that platforms will consolidate in 2023 as unprofitable partnerships end.

We expect rising loan defaults and falling swipe fee revenues to hurt the embedded finance industry, even as it benefits from more lucrative margins on lending and credit appetite during challenging economic times. Regulators will circle as risky partnerships sting providers. We expect that platforms will consolidate in 2023 as unprofitable partnerships end.

Now undoing that was probably not realistic, but clearly that's part of the debt load they're carrying, and I don't think Disney is eager to go into 2024 with even more debt on its balance sheet, which would happen if they buy Hulu. I think there are strong arguments to make in either case.

But Monzo is preparing for an uptick in loan defaults鈥攊t set aside significant funds to account for potential credit losses. The digital apps may also face innovation challenges as the fintech sector comes under fire in the UK.