SECURE Act to Improve Retirement Saving Options
The biggest financial services news the previous month was passage of the SECURE Act, which was signed into law on Dec. 20, 2019,and is expected to produce some of the biggest improvements to our country’s retirement system in 13 years. The Act, an acronym for “Setting Every Community Up for Retirement Enhancement,” includes several important new provisions, such as extending the time frame for contributing to retirement accounts, allowing small businesses to join together to form multiple employer plans, and permitting annuities to be offered in company retirement plans for the first time. Dale Brown, President and CEO for the non-profit financial advocacy group Financial Services Institute, said approval of the SECURE Act “is a significant victory for Main Street Americans” and “an important measure to address the retirement savings crisis.”
Corporate Venture Capital Deals in Financial Services Set Record
The venture capital divisions of financial services companies invested in a record 368 deals worth $9.6 billion through the third quarter of 2019, according to CB Insights. The research firm said bank corporate venture capital (CVC) investments represented 43 percent of financial services transactions during the first nine months of 2019. Bank CVC investment activity was five times higher in Q3 2019 compared to Q3 2014.
Online Bank Chime’s Valuation Quadruples
Speaking of financial services investments, U.S. online bank Chime secured $500 million in Series E funding that increased its valuation to $5.8 billion – up from $1.5 billion less than one year after it raised $200 million. The company plans to use the proceeds for new product development and to double staffing, including opening a new office in Chicago, according to a CNBC report. The company’s growth has exploded over the past year. The digital bank has an estimated 6.5 million accounts, up from one million in 2018, according to a report in Forbes, which said Chime will generate an estimated $200 million in revenue in 2019.
Jeffries Report: Millennials Still Want Bank Branches
While the online-only banks continue to increase market share, investment bank Jeffries Financial Group says younger people still want to visit branches, according to a report at CNBC. In its recent retail banking survey, Jeffries that 18-34-year-olds “still view as important” local bank branches. Millennials said branches are one of the top reasons for opening an account with a bank.