This Week in Fintech (1/31)

This Week in Fintech (1/31)

Hello Fintech Friends,

Well, it happened: I breached my own SLAs and missed my Friday morning deadline to send this out. I aim to publish these each Friday around 9am ET but some weeks, as with all passion projects, life gets in the way.

If you’re ever in the mood for Friday morning fintech and this newsletter is running behind, here are some other fintech writers I enjoy and recommend: All The Fintech, Fintech World Tour, Fintech Today, and Fintech Collective (no relationship to any of them).

And now, another exciting week of fintech news below.

Quote of the week

“The influence might go both ways; bringing boring banking to Goldman might also mean bringing some Goldman to boring banking.”


- Matt Levine (source)
Open role spotlight

Matt Harris at Bloom Credit is hiring a lot. The team is looking for more senior developers, including an opportunity for a back-end developer to work with new technologies using modern frameworks on credit problems.

Read of the week

Inequality is the theme of this week’s reads.

New York is the latest US city - following Pittsburgh and San Francisco - to ban cashless stores. The regulatory rationale is that the customers without access to credit or digital payments are disproportionately low-income, immigrant, and minority customers. (Around 11% of New Yorkers don’t have bank accounts.) As this trend grows, it will be interesting to see whether fintechs rise to the challenge of better tailoring their solutions to help these underserved populations.

In the same vein, in Does Personal Finance Still Work in Our Changing Economy? The New York Times considers the extent to which consumer financial health, rather than policy changes, can really improve people’s financial situations. (h/t my colleague Jennifer)

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In banking and credit card news, Goldman Sachs held its first-ever investor day in the bank’s history, and continued to roll out new consumer banking products. In 2020, it will launch a wealth management tools, and in 2021, a digital checking account under its Marcus brand.

FICO announced that it will release a new credit scoring model this week, which takes into account more data on account balances and missed payments. 40 million consumers are expected to have lower credit scores as a result. While the new score drew critics, it is possible that -- as recession-era derogatory marks drop off reports (7+ years) and issuers compete for cardholders, resulting in more cards per-person and lower utilization rates -- differentiating factors will help lenders better perceive risk in an environment where more and more customers look Prime. This could ultimately help offset consumer credit overextension and losses in the event of a future recession.

In the latest salvo of the brokerage wars -- which have seen major US brokerages slash commissions, consolidate, and release new features -- Fidelity this week launched trading of fractional shares.

Mastercard, which has been aggressively expanding card count through fintech partnerships such as those with Brex, Revolut and TransferWise, beat expectations on card spending.

UK bank NatWest announced its “Intelligent Safe” for small businesses that allows business owners to deposit cash into a safe and credit their accounts same-day without visiting a branch. Lloyds Bank in the UK, which this week released a carbon emissions app for Commercial Banking clients to make energy-efficient investments in their buildings, will be closing 56 more bank branches this year, thinning out banking in communities that need it.

Standard Chartered announced a partnership with Bahrain Fintech Bay to support fintech innovation in the Middle East. Brazilain bank BNP Paribas is teaming up with corporates in Sao Paolo to lure fintech talent to the city. And Spanish CaixaBank announced a partnership with Plug and Play to build a Spanish fintech startup program.

In payments infrastructure news, The Clearing House, which runs the bank-to-bank Real Time Payments network that launched in 2017, is raising the transaction limit from $25,000 to $100,000. This comes as the Federal Reserve preps to bring RTP to ACH in 2023.

The CFPB, which has recently been criticized for rolling back protections in areas like payday loans, announced new limits on the ways in which it will pursue banks for abusive practices.

In yet another cautionary tale for merchant payment processors, 30 million credit card numbers believed to have been stolen from Wawa wound up for sale on the dark web.

The Indian non-profit National Institute for Smart Government proposed a central bank-owned digital rupee on a permissionless blockchain. Japan’s parliament also announced its intentions this week to explore a digital yen.

The Bank of England, the UK’s central bank, is seeking a cloud tech partner for its One Bank Service Transformation initiative.

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In fintech news this week, one of the more impressive headlines was that German neobank N26, which opened its doors in the US six months ago, passed 250,000 American accounts opened, with 5 million customers worldwide. Fintech Today evaluates the meaningfulness of the numbers and Quartz’s Future of Finance takes a deeper look at N26 users.

Dutch neobank Bunq, which launched a Green Card in November that plants a tree on behalf of every $100 a user spends, planted 40,000 trees in conjunction with Eden Reforestation Project.

Even this week added an automated savings tool to its personal financial management dashboard, which lets users set aside funds for up to three savings goals and automatically allocate up to 10% of each paycheck towards each goal.

Holvi, a Finnish banking service for small businesses, is getting ready to launch in the UK, and Contour, a startup which condenses the trade finance letter-of-credit process using blockchain, is publicly launching this week.

Stubhub is partnering with fintech installment loan provider Affirm to finance Superbowl tickets, with APRs up to 30%.

Square released its 2020 Capital Report, which covers the state of the economy and confidence for small businesses based off Square data.

In a world where Open Banking allows consumers to connect more of their digital financial accounts, Apple has walked a tightrope between privacy and digital experience. Customers who complained that they cannot import their Apple Card data into services like Mint can now export spreadsheets of all their transactions.

Revolut customers are threatening to sue the bank for leaving them locked out of their savings accounts, sometimes for weeks at a time. Meanwhile, Robinhood customers are complaining as the fintech lags in the public launch of its fractional share trading service following Fidelity’s announcement.

Rellevate, a US digital banking platform offered through employers, partnered with Technisys as its core provider.

Chime is following in the sports footsteps of Sofiand Moneylion, finalizing a 3-year patch deal with the Dallas Mavericks.

Per Axios, the fintech VC Ribbit Capital is raising $420 million for its sixth fund. It is also raising $500 million for a fund named "Bullfrog Capital." And Lachy Groom, the former head of Stripe's issuing business, is raising a stealth seed fund.

Lastly, from Kinjal Shah at Blockchain Capital, there is interesting Ark data on the difference in public and private valuations of fintech users, and the dropoff between digital wallets and banks:

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Financings
  • Klarna, the international fintech installment lender based out of Sweden, raised a $200 million strategic round from Commonwealth Bank of Australia as it expanded into the country.
  • Mexican and Colombian small business lender AlphaCredit raised a $125 million round of equity financing.
  • UK neobank Monzo is also looking to raise £100m in fresh funding to fuel continued expansion.
  • Kredivo, Indonesia’s quickly growing purchase installment lending fintech, raised $90 million in new funding from strategic investors.
  • Cross-border payments API CurrencyCloud raised an $80 million round of funding from a group of strategic investors including Visa, which recently acquired Plaid.
  • Beacon Platform, which provides capital markets solutions for enterprise clients, closed a $20 million Series B.
  • Neocova, an API and cloud-based banking core provider, raised a $9.5 million round to build AI into its products.
  • Banking API and aggregator Teller raised $4 million to compete with Plaid.
  • Baton Systems, which provides banking infrastructure to connect ledgers, added $4 million to its recent $12 million funding round.
  • Knox Financial, a fintech for homeowners, raised $3 million in seed funding.
  • Indian cloud-based POS and method-of-payment acceptance software Pine Labs received a strategic investment from Mastercard.
  • French bank Crédit Agricole invested and took a majority stake in bank aggregation and API service Linxo for an undisclosed amount.
  • Flux, a UK fintech that provides digital receipts for neobanks, raised an undisclosed sum from Barclays following its $7.5 million Series A.
Exits and M&A
  • Fintech payments processor WEX will buy payments service providers eNett and Optal for about $1.7 billion.
  • Brazilian lender Banco Daycoval aims to raise up to $1 billion in an upcoming IPO.
  • Private equity firm Palladium soldDolEx Dollar Express, an electronic funds transfer provider, to an undisclosed group of investors and company management.
  • Greek digital bank Praxia Bank sells itself to payments processor Viva Wallet following an intervention by the country's central bank.
  • The CEO of Ripple hints at an IPO in the next 12 months.

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Deeper Reads

PayPal All In With Venmo In 2020

Banking 2020: Technology trends and the future of banking

Singapore’s new digital banks face uphill struggle

Even With Student Loans, Millennials Are Managing to Save

6 fintech patents to watch

Micro-businesses 2.0: A new generation of women “social commerce” entrepreneurs in India & Indonesia

How digital financial services can prey upon the poor

Innovation Lessons That Respond to Fintech Challenges

Colombian Minka aims to disrupt infrastructure for fintechs with blockchain

Inside Kaspi’s Kazakh banking experiment

Digital Wallet Companies Can Bank the Unbanked, While Traditional Banks Cannot

Fintech Adoption in North America Lags Global Acceptance

Younger Adults Shy Away from Credit

Mama fox feeds baby koalas separated from their mothers in Australian bush fires