Hello Fintech Friends,
Quick PSA: while we originally scheduled our Fintech Geo Deep-Dives for October 16th, we’ll push back to November 13th to give presenters more time to prepare. So far, we have presenters for India, Nigeria, the US, Mexico, and the MENA.
We got the ball rolling with our first Signals Q3 this week, breaking down fintech venture activity in Q3.
Lastly, this newsletter has become long enough to get automatically routed to spam filters. To fix that, we’ll test sending news on Fridays, and sending open roles, financings, exits, and deeper reads on Saturdays. (Please share your feedback.)
Please find another week of fintech and banking news below.
Quote of the week
“Incumbent banks spend up to $1,500 to acquire new customers compared to $20 for digital wallets. This cost advantage comes from cheaper digital and social media acquisition channels compared to previously mentioned expensive physical branches. This cost advantage means digital wallets can serve more customers profitably and is the primary way they are choosing to compete. This has allowed both Chime and Cash App specifically to target the under/unbanked population because they can profitably serve their needs.”
- Michael Jenkins (source)
Read of the week
In Fintechs Should Sell Financial Health, Not Financial Services, David Birch touches on a topic near to my heart: moving from the ‘access-based’ approach that has characterized the last decade of fintech to a financial health approach.
The conscious capitalism movement is characterized by a desire to build and consume products that are good for all stakeholders (ie. workers, the environment, users), rather than products with misaligned incentives or negative externalities. Flipping the focus to financial health forces fintechs and banks into a product construct where they only win when their customers do.
Stellar is an open network that enables cross border payments for remittances, lending, and payment processing, supported by the non-profit SDF. We recently published a blog post showing companies how they can plug into our network quickly and easily. Please reach out to Mark Heynen at firstname.lastname@example.org if you want more details.
Financial Services & Banking
Bank of America is rolling out Life Plan, a digital financial planning tool, with personalized advice for all users.
JPMorgan is partnering with fintech Affinity Capital Exchange to turn rewards points into exchangeable currency that can be collateralized and traded.
Mastercard announced a partnership with Marqeta to expand into new geographies (and made an undisclosed strategic investment) and a partnership with ACI Worldwide to enable real-time payments solutions on multiple rails. Visa announced a partnership with Stripe to enable suppliers who are unable to accept virtual card payments get paid through Visa Payables Automation.
Standard Chartered, DBS, and 12 other banks have entered into a project to create a blockchain trade finance network. Dutch bank Rabobank began facilitating digital currency payments on a new utility token it issued in-agreement with the 2Tokens Foundation. The Bank of Thailand launched a blockchain government savings bond platform.
The European Central Bank will test instant cross-border / cross-currency payments using Target Instant Payment Settlement.
In a Lendit session, FDIC Chairwoman Jelena McWilliams warned bank executives they risk being outcompeted if they are not able to adopt technology. In a House Financial Services Committee hearing, banks pushed back on the proposed OCC bank charter for tech companies. At Sibos 2020, the consensus is that banks have responded to the pandemic more proactively than the 2008 financial crisis.
Source: St. Louis Fed, domestic tightening of consumer credit in the pandemic.
PayPal launched the Venmo Credit Card, in partnership with Synchrony. The card features a scannable QR code on the front to accept peer-to-peer payments, as well as rotating cash back automatically applied to the user’s highest spend categories. Petal launched its downmarket card, Petal 1, to provide credit access to consumers with lower scores.
Plaid debuted Plaid Link, which will allow users who have previously connected a bank to bypass signing into it for new fintech apps.
Ant Group launched its new neobank in Hong Kong, with savings account APYs up to 2.5%. Revolut launched a US savings account that will pay 4.5% on the total monthly debit card spend of account-holders.
Payments infrastructure platform Dwolla announced a new partnership with Hydrogen, which will give users a low-code way to launch programmable payments applications.
Shopify partnered with Alchemy Pay to enable retailer crypto payments. Jumia and Airtel Kenya partnered to allow mobile payments via Airtel Money for e-commerce purchases. Google (disclosure: where I work) partnered with banks to refresh its payments app in India to allow real-time payments through PayNow.
Square invested $50 million in bitcoin.
Crowdfunding in Colombia has seen tailwinds thanks to regulators pushing to open capital markets to small businesses.
Lending Club will finally retire the peer-to-peer notes program it launched a decade and a half ago and pivot to offering a high-yield savings account through Radius Bank. Apple is working to fix transaction labels on its credit card statements after a tax firm had been appended by AT&T to many transactions. Virgin Money will cut 400 jobs, following its acquisition by Clydesdale and Yorkshire Banking Group.
AlphaCode Incubate announced its program for South African fintechs to access $600,000 in grant funding.