The Fed pumps the breaks on access of Fintech to FedWire, what’s going on with Facebook/Apple/Google and digital advertising.
1. Fintech trying to get access into Fed Master Accounts
Axios Capital reports on the tension of Fintech firms getting access to master account, and FedWire, through the Federal Reserve. The Fed’s reluctance comes from a worry of the likely rush of Fintech into the space and potential to disrupt the country’s entire financial system:
The issue: A bigger range of companies want access to this preferred status at the core of America’s financial system. The Fed’s Board of Governors has been reluctant to grant it, fearful that giving untested, lightly-regulated firms access to master accounts will create unintended consequences.
This issue further complicates the Biden administration’s nomination of Sarah Bloom Raskin as vice chair of the Fed for supervision, and her previous involvement in a company which touted itself as “the first fintech trust company with a Federal Reserve master account”.
2. Digital Advertising in 2022
Ben Thompson from Stratechery breaks down the effects of Apple’s App Tracking Transparency (ATT) initiative on Facebook and the rest of the digital advertising ecosystem.. Thompson looks at where these changes, and the impending decline of 3rd party cookies, will effect the major platforms (and where you likely spend more than you want of your marketing budget):
The return-on-investment (ROI) of direct response advertising is measurable to a fantastically greater degree than traditional advertising measurement, advertisers can spend right up to the level they place on a particular customer or transaction’s value; Facebook, of course, is willing to help them do that as easily as possible, squeezing out margin in the process. Moreover, because these ads are sold at auction, the company is insulated from events like COVID or boycotts.
The problem for Meta is…Apple’s initiative severed the connection amongst e-commerce sellers, app developers, and Facebook by which Facebook achieved that ROI, and while the company is better positioned than anyone else to build a replacement, it is important to note that the impairment entailed in probabilistically measuring ad effectiveness instead of deterministically is a permanent one.
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