Banks Feel Pressure From Trump's Credit Card Threats

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Watch Banks Feel Pressure From Trump's Credit Card Threats - Bloomberg on Dailymotion

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00:00I find this very interesting because rate caps also may have an impact on how unsecured credit

00:06and that's the conversation right is essentially engineered. It's also about access. Your reaction

00:12to the week's events. OK. So I think that what's most striking about this news is somehow how it

00:22has shown the U.S. commerce dependency on credit cards and credit card rails. And so we're talking

00:29about 80 percent of the population accessing credit through credit cards, plus credit card

00:34balance being 1.2 trillion, which is which I think it's a very relevant number because it shows it

00:40sizes the opportunity, you know, and it's a massive opportunity. OK. And so I think that when we talk

00:46about a limitation like this, like a restriction on an intervention on the rates, we are talking

00:56about somehow reshaping the infrastructure. You know, we always tend to think as financial

01:02infrastructure as a given, but it's actually designed, you know, and what we are having here

01:06is a direct intervention and what basically forces a conversation on the underlying infrastructure

01:12and the underlying product. And the conversation is the question is basically what needs to happen

01:18at the product level in order to meet this constraint, in order to meet this new condition,

01:23you know. And so I think that the question goes to, well, basically, what's the design,

01:28you know, like what's the shape of the credit card system right now?

01:33So at this time, right, Shumay, let me just jump in. At this time, we're also going to wait and see

01:38if this happens, what the behavioral reaction is. So let's say that a section of the economy is closed

01:44to the credit card. Well, we spoke to the Klarna CEO earlier this week, right? There's a lot of those

01:50that would talk up buy now, pay later, account to account payments. Does that kind of phase out

01:56credit card reliance? Well, I think that what will happen is that you have a 1.2 trillion

02:03opportunity, you know. And if we talk about the actual shape of the credit card system right now,

02:10it's a bundle tool. You have a payment tool plus a credit line tool, OK? And these two are combined.

02:17If we see what has happened in the payment space over the last 10 years is massive disruption,

02:24which is basically new entrants, leveraging technology to provide better and most efficient

02:30solutions, more cost effective solutions, OK? And I think that that gives us a glimpse, you know,

02:36like a clue on what could happen at the credit line infrastructure level. You know, like we could expect

02:43a movement like that. And that means new entrants, very interested, seeing the size of the opportunity,

02:50jumping into the space, leveraging new technology in order to meet the requirements of this demand,

02:56because the demand won't go anywhere, you know, and it's a huge demand.

03:01Simena, it was a big week for bank earnings where we hope to find out about how banks are using AI

03:06AI in real terms. A lot of questions to JP Morgan about how much they're spending on AI.

03:11But what was your takeaway on the transition, how we go from like analysis to the bank's running

03:17function using AI? OK. Well, I think that 2025 marks the year in which AI moved from being an

03:27experimentation to full deployment, you know. And I think that's very interesting. Perhaps the most

03:34popular initiative was open AI's instant checkout powered by Stripe. Definitely we will see more of

03:41that, especially in the financial institutions, banks landscape over this year, you know. And I think

03:49that that will bring a lot of innovation and a lot of news over the incoming year. I think that what we've

03:57seen over 2025 is AI becoming an efficiency lever and not an innovation toy anymore, you know. And so what financial

04:08institutions, banks have done is use AI internally. Initially, it was mostly chatbots, more projects. But what we've done,

04:19what they have noticed is that basically AI can impact the main areas of the financial institution and especially for banks that have been

04:30historically very site have had certainly every silo tech stack, you know, with different parts of the bank having different

04:37databases, different technologies, different systems. AI helps all of these to come together, you know, and work as a

04:46comprehensive tech stack, you know. And so now we are seeing initiatives in fraud and credit, of course, in middle and back office, you

04:56know, and creating efficiencies in speed. OK. And this is real time responses to anything that a user can need.

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