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Why Banks Are Eliminating Overdraft Fees

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The average overdraft fee costs consumers $35 per infraction, which makes it an inconvenient and frustrating part of day-to-day banking for many people. But some major banks — Capital One, Bank of America, Truist, U.S. Bank and Wells Fargo — have made recent moves to reduce or eliminate overdraft fees for their customers. In 2019, Discover also moved to remove fees on all of its bank accounts, including overdraft fees, and Ally Bank removed overdraft fees in 2021.

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According to research from the Consumer Financial Protection Bureau, banks collectively earned more than $15 billion in overdraft fees in 2019, which means that individual banks could potentially miss out on hundreds of millions of dollars if they stop charging overdraft fees. For example, Capital One’s move to remove overdraft fees will cost the company $150 million, according to a spokesperson.

So what’s in it for the banks that are getting rid of these fees?

Why are banks removing or reducing overdraft fees?

“Overdraft fees are deeply unpopular with consumers, and consumers have more choices now,” says Leigh Phillips, CEO of nonprofit fintech SaverLife and the chair of the Consumer Advisory Board for the Consumer Financial Protection Bureau. “They used to just have mainstream options like banks and credit unions or fringe services like payday loans. Now neobanks and challenger banks are creating services that are a good fit for a variety of consumers.”

With the rise of these new, smaller banks, plus online and mobile-first banking services, the banking industry has had to find more ways to compete for new customers. Overdrafts can be stressful and expensive, and if a bank can help customers avoid these potentially significant fees, that bank could be more appealing to consumers.

“What we’ve found is that when we make these kinds of changes, our customers notice and prospective customers notice, too,” says a Capital One spokesperson. “We have come to realize that these policies, while expensive in the short term, pay off in the long run.”

Some financial institutions, such as Chime and SoFi, have gone as far as to offer consumers a certain amount of money — similar to a line of credit — that they can tap if they overdraw their accounts. These features are provided for free with qualifying account activity. For example, Chime’s SpotMe feature can give customers up to $200 to cover the cost of a transaction instead of overdrafts, and SoFi offers customers up to $50.

The current system for overdrafts

Overdraft fees often involve more than just the one-time fee for overdrawing an account. Sometimes, a bank will charge an overdraft fee multiple times per day if a customer keeps using their debit card without sufficient funds in their account, which could add up to hundreds of dollars. There can also be additional related fees for having an ongoing negative balance, using an overdraft protection transfer service or using an overdraft line of credit. Ultimately, consumers can be responsible for substantial overdraft-related fees, making financial hardship even more difficult.

“Some consumers get into a bad pattern of overdrafting, often because they made a mistake or didn’t get paid what was expected,” Phillips says. “When they do get paid again, a lot of it is being taken to pay off overdraft fees. It’s not sustainable, especially for people who are in the lower socioeconomic spectrum or don’t have consistent income, like people who work in the gig economy or have hourly jobs.”

When banks enforce overdraft fees, they have a way of punishing people who are likely already facing some financial difficulty. The coronavirus pandemic has highlighted this hardship as people have had to adjust to new ways of working and making ends meet. Therefore, the trend of banks removing or reducing overdraft fees can be seen as a step forward for consumers who need help improving their financial standing.

“By making changes to our overdraft and non-sufficient funds fee policies, we are providing customers with an opportunity to better manage their cash flow, course correct when needed and support their growth and financial well-being,” says a Capital One spokesperson.

The move to remove overdraft fees is good for consumers. Nevertheless, overdraft fees might be a relatively low source of revenue for a bank. For example, Capital One reported a net income of $3.1 billion in the third quarter of 2021 alone. The $150 million the company says it will lose from overdraft fees is about 4.8% of its total net revenue for that quarter. Compared to revenue for the whole year, that percentage will dramatically drop.

How consumers can evaluate and avoid overdraft fees

Consumers dealing with harsh overdraft policies at their current bank can look into banking products that don’t have overdraft fees or give customers the option to turn it off, meaning a transaction will be declined if the account has insufficient funds. Consumers can also look for banks that alert customers when their account balance is getting low.

Since excessive overdraft fees can get in the way of building wealth, Phillips sees the trend of banks removing them as a positive and inclusive move for more consumers to establish and maintain their financial security.

“We’re in a time where people need to participate in the financial mainstream with equal access,” Phillips says.

The article Why Banks Are Eliminating Overdraft Fees originally appeared on NerdWallet.

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Intel researchers see a path to trillion-transistor chips by 2030

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Intel announced that its researchers foresee a way to make chips 10 times more dense through packaging improvements and a layer of a material that is just three atoms thick. And that could pave the way to putting a trillion transistors on a chip package by 2030.

Moore’s Law is supposed to be dead. Chips aren’t supposed to get much better, at least not through traditional manufacturing advances. That’s a dismal notion on the 75th anniversary of the invention of the transistor. Back in 1965, Intel chairman emeritus Gordon Moore predicted the number of components, or transistors, on a chip would double every couple of years.

That law held up for decades. Chips got faster and more efficient. Chip makers shrank the dimensions of chips, and goodness resulted. The electrons in a miniaturized chip had shorter distances to travel. So the chip got faster. And the shorter distances meant the chip used less material, making it cheaper. And so Moore’s Law’s steady march meant that chips could get faster, cheaper, and even more power efficient at the same time.

But Moore’s Law really depended on brilliant human engineers coming up with better chip designs and continuous manufacturing miniaturization. During recent years, it got harder to make those advances. The chip design ran into the laws of physics. With atomic layers a few atoms thick, it wasn’t possible to shrink anymore. And so Nvidia CEO Jensen Huang recently said, “Moore’s Law is dead.”

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Intel showed how it could build chips with complex interconnected packages.

That’s not good timing, since we’re just about to start building the metaverse. Moore’s Law is vital to addressing the world’s insatiable computing needs as surging data consumption and the drive toward increased artificial intelligence (AI) brings about the greatest acceleration in demand ever.

A week after Nvidia’s CEO said that, Intel CEO Pat Gelsinger said that Moore’s Law is alive and well. That’s no surprise since he has bet tens of billions of dollars on new chip manufacturing plants in the U.S. Still, his researchers are backing him up at the International Electron Devices Meeting. Intel made it clear that these advances are may five to ten years out.

In papers at the research event, Intel described breakthroughs for keeping Moore’s Law on track to a trillion transistors on a package in the next decade. At IEDM, Intel researchers are showcasing advances in 3D packaging technology with a new 10 times improvement in density, said Paul Fischer, director and senior principal engineer in components research at Intel, said in a press briefing.

“Our mission is to keep our options for process technology rich and full,” he said.

These packages have been used in innovative ways lately; Intel rival Advanced Micro Devices announced that its latest graphics chip has a processor chip and six memory chips — all connected together in a single package. Intel said it collaborates with government entities, universities, industry researchers, and chip equipment companies. Intel shares the fruits of the research at places like the IEDM event.

Intel also unveiled novel materials for 2D transistor scaling beyond RibbonFET, including super-thin materials just three atoms thick. It also described new possibilities in energy efficiency and memory for higher-performing computing; and advancements for quantum computing.

“Seventy-five years since the invention of the transistor, innovation driving Moore’s Law continues to address the world’s exponentially increasing demand for computing,” said Gary Patton, Intel vice president of components research and design enablement, in a statement. “At IEDM 2022, Intel is showcasing both the forward-thinking and concrete research advancements needed to break through current and future barriers, deliver to this insatiable demand, and keep Moore’s Law alive and well for years to come.”

The transistor’s 75th birthday

The layers between chip circuits can be as little as three atoms thick.

Commemorating the 75th anniversary of the transistor, Ann Kelleher, Intel executive vice president and general manager of technology development, will lead a plenary session at IEDM. Kelleher will outline the paths forward for continued industry innovation – rallying the ecosystem around a systems-based strategy to address the world’s increasing demand for computing and more effectively innovate to advance at a Moore’s Law pace.

The session, “Celebrating 75 Years of the Transistor! A Look at the Evolution of Moore’s Law Innovation,” takes place at 9:45 a.m. PST on December 5.

To make advances required, Intel has a multi-pronged approach of “growing signficance and certainly a growing influence within Intel” to look across multiple disciplines.
Intel has to move forward in chip materials, chip-making equipment, design, and packaging, Fischer said.

“3D packaging technology is enabling the seamless integration of chiplets,” or multiple chips in a package, he said. “We’re blurring the line between where silicon ends and packaging begins.”

Continuous innovation is the cornerstone of Moore’s Law. Many of the key innovation milestones for continued power, performance and cost improvements over the past two decades – including strained silicon, Hi-K metal gate and FinFET – in personal computers, graphics processors and data centers started with Intel’s Components Research Group.

Further research, including RibbonFET gate-all-around (GAA) transistors, PowerVia back side power delivery technology and packaging breakthroughs like EMIB and Foveros Direct, are on the roadmap today.

At IEDM 2022, Intel’s Components Research Group said it is developing new 3D hybrid bonding packaging technology to enable seamless integration of chiplets; super-thin, 2D materials to fit more
transistors onto a single chip; and new possibilities in energy efficiency and memory for higher-performing computing.

How Intel will do it

Intel foresees voracious demand for computing power.

Researchers have identified new materials and processes that blur the line between packaging and silicon. Intel said it foresees moving from tens of billions of transistors on a chip today to a trillion transistors on a package, which can have a lot of chips on it.

One way to make the advances is through packaging that can achieve an additional 10 times interconnect density, leading to quasi-monolithic chips. Intel’s materials innovations have also identified practical design choices that can meet the requirements of transistor scaling using a novel material just three atoms thick, enabling the company to continue scaling beyond RibbonFET.

Intel’s latest hybrid bonding research presented at IEDM 2022 shows an additional 10 times improvement in density for power and performance over Intel’s IEDM 2021 research presentation.

Continued hybrid bonding scaling to a three-nanometer pitch achieves similar interconnect densities and bandwidths as those found on monolithic system-on-chip connections. A nanometer is a billionth of a meter.

Intel said it is looking to super-thin ‘2D’ materials to fit more transistors onto a single chip. Intel demonstrated a gate-all-around stacked nanosheet structure using a thin 2D channel just three atoms thick, while achieving near-ideal switching of transistors on a double-gate structure at room temperature with low leakage current.

These are two key breakthroughs needed for stacking GAA transistors and moving beyond the fundamental limits of silicon.

Researchers also revealed the first comprehensive analysis of electrical contact topologies to 2D materials that could further pave the way for high-performing and scalable transistor channels.

To use chip area more effectively, Intel redefines scaling by developing memory that can be placed vertically above transistors. In an industry first, Intel demonstrates stacked ferroelectric capacitors that match the performance of conventional ferroelectric trench capacitors and can be used to build FeRAM on a logic die.

An industry-first device-level model captures mixed phases and defects for improved ferroelectric hafnia devices, marking significant progress for Intel in supporting industry tools to develop novel memories and ferroelectric transistors.

Intel sees a path to trillion-transistor chips with several approaches.

Bringing the world one step closer to transitioning beyond 5G and solving the challenges of power efficiency, Intel is building a viable path to 300 millimeter GaN-on-silicon wafers. Intel breakthroughs in this area demonstrate a 20 times gain over industry standard GaN and sets an industry record figure-of-merit for high performance power delivery.

Intel is making breakthroughs on super-energy-efficient technologies, specifically transistors that don’t forget, retaining data even when the power is off. Already, Intel researchers have broken two of three barriers keeping the technology from being fully viable and operational at room temperature.

Intel continues to introduce new concepts in physics with breakthroughs in delivering better qubits for quantum computing. Intel researchers work to find better ways to store quantum information by gathering a better understanding of various interface defects that could act as environmental disturbances affecting quantum data.

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3 ways emotion AI elevates the customer experience

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Technology serves as a way to bridge the gap between the physical and digital worlds. It connects us and opens up channels of communication in our personal and professional lives. Being able to infuse these conversations — no matter where or when they occur — with emotional intelligence and empathy has become a top priority for leaders eager to help employees become more effective and genuine communicators.

However, the human emotion that goes into communication is often a hidden variable, changing at any moment. In customer-facing roles, for example, a representative might become sad after hearing why a customer is seeking an insurance claim, or become stressed when a caller raises their voice. The emotional volatility surrounding customer experiences requires additional layers of support to meet evolving demands and increasing expectations.

The rise of emotion AI

Given how quickly emotion can change, it has become more important for technology innovations to understand universal human behaviors. Humans have evolved to share overt and sometimes subconscious non-lexical signals to indicate how conversations fare. By analyzing these behaviors, such as conversational pauses or speaking pace, voice-based emotion AI can reliably extract insights to support better interactions.

This form of emotion AI takes a radically different approach than facial recognition technologies, more accurately and ethically navigate AI usage. Customer-facing organizations and their leaders must raise their standards for emotion AI to focus on outcomes that boost the emotional intelligence of their workforce and provide support to create better customer experiences.

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Emotion AI is not a new concept or practice of technology. It has been around for years, but recently has gained momentum and attention as more companies explore how it can be applied to specific use cases. Here are three ways that customer-facing organizations can use voice-based emotion AI in the enterprise to elevate customer experience initiatives:

Increase self-awareness

Think of emotion AI as a social signal-processing machine that helps users perform better, especially when they’re not at their best. In the world of customer experience, representatives undergo many highs and lows. These interactions can be abrasive and draining, so offering real-time support makes all the difference.

These situations are similar to driving a car. Most individuals consistently perform driving fundamentals, but do not drive as well when tired from a night shift or long road trip. Tools like lane detectors can provide additional support, and emotion AI is the workplace equivalent. Not only can it offer real-time suggestions for better interactions with others, but the increase in self-awareness helps foster deeper emotional intelligence. Ultimately, when better emotional intelligence is established, more successful customer service interactions can occur.

Improve employee confidence and well-being

Customer experience is intrinsically tied to employee experience. In fact, 74% of consumers believe that unhappy or unsatisfied employees harm customer experiences. The problem is that showing up to work engaged and at our optimal efficiency every single day and in every instance is not a realistic expectation for employees.

Emotion AI can remove anxiety and self-doubt around performance by helping individuals through difficult experiences and encouraging them during positive ones. This added support and confidence promotes employee engagement and creates a space for employee wellbeing to shine. Any investment in improving work experiences or making workflows more frictionless is a reliable way to boost employee experiences and see ROI across multiple enterprise divisions.

Understand the customers’ state

Consider the driving metaphor again. While it’s vital to ensure a tired driver receives the aid they need to get home safely, the context makes the difference.

Call center representatives consistently multitask — conversing with customers while updating or identifying records, seeking to find a solution and managing inquiries promptly. Utilizing voice-based emotion AI to analyze the sentiment on both ends of the line can provide detailed insights needed to perform and connect. When emotion AI can identify customers who are “highly activated” with excitement or anger, agents are more equipped to take stock of the situation and find the best approach forward. Expanding situational awareness around customers’ mental states and analyzing the data can help enterprises consistently improve call outcomes.

Investing in emotion AI technology could not be more pertinent as we look to the future. Forrester’s 2022 U.S. Consumer Experience Index found that the country’s average CX score fell for the first time after years of consistent, positive growth. While a myriad of influences are at play, from supply chain shortages to the Great Resignation, the reality is that customers have grown to have higher expectations of the businesses they interact with, and it is no longer an option to underperform.

Finding opportunities to ignite emotion across the enterprise and use technology to improve service interaction is critical to customer satisfaction. It’s up to organizations to invest in technology that celebrates and improves emotional intelligence for continued success — and it starts with introducing technology like emotion AI.

Josh Feast is CEO and cofounder of Cogito.

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Copycats can drown   • TechCrunch

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Welcome to Startups Weekly, a nuanced take on this week’s startup news and trends by Senior Reporter and Equity co-host Natasha Mascarenhas. To get this in your inbox, subscribe here.

To end the year, let’s continue to return to columns that I wrote that have aged, well, interestingly. In July, I wrote about how Y Combinator is building a Product Hunt, Product Hunt is building an Andreessen Horowitz and Andreessen Horowitz is building a Y Combinator. It was a not-so-subtle nod to how top institutions are trying to be accelerators, discovery engines, content marketers and check-writers all in one.

Enter the latest. Future, Andreessen Horowitz’s formal foray into tech media, is shutting down less than two years after first launching, according to Business Insider. To me, the shutdown is less about a venture firm failing to jump into the editorial space — the firm is still very much creating content and even building a new podcast on tech and culture as we speak — and more about how the medium is truly the message.

The whole allure of going direct as a founder and venture capitalist is built around assumptions. First, that you have something important to say. Second, you have to believe that you can package that content in a compelling way, consistently. And third, perhaps most importantly of them all, your important, well-packaged content needs to find an audience that trusts it.

It’s one of the many reasons that media is a hard business, and one of the reasons I’m not surprised to see Future shut down (despite the fact that the venture firm could, presumably, keep funding a version of it). Some think that there was an obvious advantage to the firm having a home to house smart content on its portfolio companies, but just because something makes sense doesn’t mean that it has the impact that an institution would hope for.

A16z has built a reputation around being a services-oriented firm. To me, the story is less that a venture firm with billions in assets under management failed at a plucky experiment. It’s more that, in the pursuit to be an accelerator, discovery engine, content marketer and check-writer, organizations are teaching us in real time what translates and what doesn’t.

We often think about the webs of venture capital in a conflict of interest type aperture — and there’s more to come on that angle in the weeks to come. But this week has me thinking about how the intertwinement of different trends, themes and products shifts as priorities do, too.

You can find me on TwitterSubstack and Instagram, where I publish more of my words and work. In the rest of this newsletter, we’ll talk about executive turnover, red flags and good news.

Executive turnover and the art of conflict

Tech’s labor market has certainly raised many questions around the stability of certain industries and roles — and if growth can protect a company from having layoffs. The big news of this week was that Bret Taylor stepped down from his co-chair and CEO position at Salesforce, a month after losing his job as Twitter’s board chair after Elon Musk bought the social media platform.

But that’s not the only kerfuffle in town this week.

This week, DoorDash and Kraken cut portions of their workforce. BloomTech, formerly known as Lambda School, cut half of staff in its third layoff since the beginning of the pandemic. And on Friday, Opendoor CEO Eric Wu stepped down, to be succeeded by CFO Carrie Wheeler. Turnover is everywhere, both voluntary and involuntary, which makes me think a lot about the second-order consequences.

Here’s why this is important, via Brava Leaders CEO Karla Monterroso:

We are at the beginning of creating what multicultural institutions look like and how they will operate. I do think a lot of the turnovers that we’re seeing, whether it is the layoffs or the new management, means that people are coming in to create homogeneity in their companies yet again.

So, they do a layoff, and they take all the complexity out. They slice off the parts of the organization that created friction. And that friction is essentially what makes multicultural institutions more effective because they’re asking different kinds of questions. But a lot of the leaders that are coming in do not have the range to manage a multicultural organization or company. And because they don’t have the range for it, they just cut it out. Then that creates homogeneity because that is what makes a band of leaders comfortable right now. And we’re going to need leadership that is actually much more comfortable with complexity.

Co-CEO of Salesforce, Bret Taylor, speaks at the Vivatech show in Paris, France, June 15, 2022. (AP Photo/Thibault Camus)

Image Credits: Thibault Camus / AP Photo

Are red flags really that hard to spot?

Equity also unpacked the latest blog post written by famed venture capitalist Bill Gurley — in which he lists out the red flags that investors should look out for when investing in startups. As you may be able to tell by our title of the episode, we certainly had thoughts.

Here’s why this is important: While I’m all for highlighting explicit mistakes that budding investors should avoid, Gurley’s post missed a key point — which is that many investors do know how to identify red flags, they just choose to ignore them in pursuit of “the outlier.” What will actually stop investors from backing the next FTX is to create an environment where conflict is prioritized over groupthink.

"Subject: Tropical storm in the beach paradise ResortLocation: Playa del Carmen, Riviera Maya, Mexico."

Image Credits: YinYang (opens in a new window) / Getty Images

[Insert good news here]

We’re officially at the time of year, and part of the news cycle, when I’m desperately searching for good news to highlight.

Here’s what made me smile this week:

Famous Golden Gate Bridge with buildings in the background in San Francisco, California, USA

Image Credits: Wirestock (opens in a new window) / Getty Images

A few notes

Seen on TechCrunch

San Francisco police can now use robots to kill

Elon Musk suspends Kanye West’s account for breaking Twitter rules

LastPass says it was breached — again

Instafest app lets you create your own festival lineup from Spotify

Here’s everything AWS announced in its re:Invent data keynote

Seen on TechCrunch+

Box reaches $1B run rate in spite of a quarter dogged by currency challenges

ChatGPT isn’t putting me out of a job yet, but it’s very good fun

Startup valuations are declining — but not consistently

Proptech in Review: 3 investors explain why they’re bullish on tech that makes buildings greener

As BlockFi files for bankruptcy, how contagious will FTX’s downfall become?

If you like this newsletter, do me a quick favor? Forward it to a friend, tell me what you think on Twitter, and follow my personal blog for more content. We only have a few more issues of Startups Weekly until next year, some come back next week — OK?

Stay warm,

N



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