This Week in Fintech (5/15)

This Week in Fintech (5/15)

Hello Fintech Friends,

Something I’ve seen hotly debated is which of the recently launched fintech debit cards has the best design. The jury is still out, so I added a cursory poll to this week’s newsletter to settle the matter.

I would be remiss not to mention we started sending out subscriber content this week as well: a quarterly deep-dive into fintech’s Q1, looking at (1) fundraising, (2) M&A, (3) product launches, (4) product shutdowns, and (5) KPIs.

Please enjoy another week of fintech and banking news below.

Quote of the week

“We have to invest in technology and software so that these ‘capillary banking systems’ are more efficient and they have more access to capital so they can engage with these businesses that are underbanked.”
  • Robert Smith. CEO, Vista Equity Partners (source)

Open role spotlight

As more fintech companies find themselves in the difficult position of making tradeoffs between burn rate / runway and talent, we may unfortunately see great employees searching for their next role. If your company is hiring, I would like to highlight a fantastic group of former colleagues here, pursuing the next opportunity.

Separately, Marqeta announced this week it expects to grow headcount by 20% this year.

Please keep forwarding any open roles or great employees -- the fintech community is at its best when people help each other out.

Read of the week

In The financial world’s nervous system is being rewired, The Economist provides a great summary of the geopolitical drivers behind the restructuring of international money transfer rails. From CIPS, China’s SWIFT competitor to process payment messages in yuan, to Instex, a British, French, and German payments system for trading with Iran, to crypto ledgers like Ripple, the world is fracturing into competing payments rails.


Banking and Credit Cards

JPMorgan has taken the significant step of offering bank accounts to cryptocurrency exchanges, beginning with Gemini and Coinbase, who will be able to use the bank’s deposit, transfer, and clearing services.

Mastercard has pledged to bring 1 billion people, 50 million micro and small businesses, and 25 million women entrepreneurs into the digital economy by 2025. The company will work on government disbursements, wage digitization, and mobile payments.

Tencent is launching a co-branded card with Visa and China Guangfa Bank, which users can apply for via WeChat and use to pay for overseas purchases, and rolling out a credit scoring system. UBS will apply for a digital banking license in China to serve high net worth customers. HSBC’s Hong Kong bank has opened its PayMe digital wallet to teenagers aged 16 and above, with a Children Savings Account for customers from age 11.

Berkshire Hathaway sold half a million shares in US Bancorp, and now owns less than 10% of the bank.

The Federal Reserve opened a FedNow Community group looking for volunteers to support its expected 2023 FedNow instant payments system, a rival to The Clearing House’s RTP (which anticipates close to 90% adoption by year-end). Meanwhile, India’s instant payment system - the Unified Payments Interface - has provided an astounding boost to financial innovation and financial inclusion in the country, even as some banks fail.

The City of Hudson, New York, launched a universal basic income initiative to provide residents with $500 per month for five years. 👏

The Central Bank of Brazil expects that open banking will be in full implementation in the country’s financial institutions by the end of 2021. 75 credit unions in Canada will partner with IBM, meanwhile, to overhaul digital payments. Singapore announced a S$6 million FinTech Solidarity Grant.

Lombard Odier Investment Managers will provide clients with a fintech stock-picking strategy.

Source: Alexander Hamilton


Fintech

Product Launches

Jiko launched a retail bank backed by Treasury Bills, which consumers can buy directly.

Oxygen announced the public launch of its bank for freelancers and small businesses.

TrueLayer launched a no-fee charity donation app in the UK that uses payments rails to enable direct account-to-account transfers.

Artis Connect launched a white-labeled lending solution to connect financial institutions and small businesses.

Other News

The return of volatility to the stock market has turbo-charged investment app activity, with some apps reporting a 300% jump. But low-friction investing and trading apps have caught many new investors flat-footed aas they lose money to professional traders.

Details have emerged about CartaX, the private equity secondary sale market that Carta is planning to rival Nasdaq’s SecondMarket platform and make startup equity mainstream.

UK fintechs Starling Bank and Funding Circle are teaming up to provide £300 million in small business loans as part of the government’s coronavirus lending program (CBILS).

Green Dot will be delivering stimulus payments to unbanked consumers via Walmart cards.

As the economic downturn has a pronounced impact on fintechs, M&A activity and consolidation in the sector may accelerate. Forbes digs into 12 possible acquisition targets: Commonbond, Kabbage, OnDeck, Prosper, Upstart, Current, Moneylion, Betterment, Personal Capital, Wealthfront, Transferwise, and Next. Many consumer fintechs are poised to weather the downturn well, however - with fundraises in the 10s or 100s of millions over the past year.

Apple Pay has driven an increase in mobile money usage in Australia, from 7% a year ago to 10% today.

Women’s World Banking launched a challenge for contributors to identify fintech innovations providing unbanked and underserved women with access to financial services.

The Chainsmokers (yes, the band) is launching a $50 million venture capital fund, beginning with an investment in mortgage lender Loansnap.

Swedish neobank Rocker has chosen Finnish card printer Enfuce to issue cards and process payments.

Furloughs continue to roll through the fintech workforce, with the latest staff cuts at N26’s US operation and Swiss open banking app Numbrs.

Source: CB Insights


Financings

  • Australia’s Judo Bank, a neobank for small businesses, raised $230 million in new funding.
  • Members Exchange (MEMX), a new more investor-friendly, low-fee US stock exchange taking on NYSE and Nasdaq, raised $65 million in new funding.
  • Symend, a Canadian fintech which uses machine learning to automate debt resolution processes, raised $52 million to apply towards R&D and international expansion.
  • Verteva, a New Zealand-based digital mortgage lending business, raised $33 million in funding.
  • Financial crime behavioral tracking software Featurespace raised £30 million.
  • Anyfin, the Swedish refinancing and financial health platform, raised $30 million in new funding.
  • A consortium of banks, led by Deutsche Bank, HSBC, JPMorgan, State Street, Citi, and BNY Mellon, invested $20.5 million in UK proxy voting fintech Proxymity.
  • Validus, a Singaporean small business lending platform in Singapore, Vietnam, and Indonesia, raised $20 million of a Series B+.
  • Modulr, a payments as a service for wholesale banking fintech in the UK, raised  £18.9 million in growth funding.
  • ANNA, which provides a UK banking, tax, and accounting platform for small businesses, raised £17.5 million to expand into Europe.
  • FalconX, which helps provide financial services institutions with more accurate cryptocurrency pricing information, raised $17 million.
  • Vise, a personal financial management startup, raised a $14.5 million Series A.
  • Student financial aid assistance platform Mos secured a $13 million Series A.
  • Indexing and ESG investment platform OpenInvest raised a $10.5 million Series A1.
  • Comission-free UK trading app Freetrade crowdfunded £4.5 million.
  • UK fintech Primer, which helps businesses consolidate their forms of payment, added a £3.2 million seed round to its prior £600,000 seed funding.
  • Clim8, an ESG investing app, crowdfunded a £1.35 million seed.
  • Barclays made the first investment from its £175 million Sustainable Impact Capital fund, an undisclosed amount in SaveMoneyCutCarbon.

Exits and M&A

  • Italian bank Banca Farmafactoring plans to merge with DEPObank by purchasing a stake for up to $215 million in equity.
  • The race to create a liquid private securities market for secondary sales is heating up, with Forge acquiring SharesPost for $160 million in cash and stock to rival Carta and Secondmarket.
  • Banrisul, a Brazilian state-run bank owned by majority shareholder Rio Grande do Sul, is looking to sell off its credit card business, previously valued at $432 million.
  • Charles Schwab acquired the technology and team of investing platform Motif, as accounts were transferred to Folio.
  • And Goldman Sachs will acquire Folio for an undisclosed amount.
  • Wealth management fintech iCapital will acquire rival Artivest. Terms were not disclosed.
  • Pricefx, a German cloud pricing startup, acquired French AI pricing startup Brennus Analytics. Terms were not disclosed.
  • Payments platform WEX is threatening to renege on its planned $1.7 billion takeover offer for travel payment services providers eNett and Optal due to coronavirus impacts on the targets’ businesses.
  • Australian financial services company AMP has abandoned plans to divest its New Zealand wealth management business after its offer fell short of expectations due to coronavirus.
  • German Commerzbank is abandoning plans to sell its 69.3% majority stake in Polish banking unit mBank, due to coronavirus-related market concerns.

Deeper Reads

Banks as Payment Processors. Monetary Policy 101

A Trip into the Nigerian Payments Ecosystem

The problem with money

The State Of Fintech Q1’20 Report

Fintech Fundraising and M&A During a Pandemic

PayPal, Western Union and FIS launched accelerators to fuel the future of fintech — but not in NYC or SF

QED: This isn’t your typical recession

Venture Capital Has A Lot To Learn From Fintech

Lessons from Starting (and Ending) a Startup

The pandemic’s impact on digital payments and cash, in five charts

The Small-Business Die-Off Is Here

Consumers Seeking Debt Relief Amid Coronavirus Face Jammed Phone Lines, Overwhelmed Lenders

Fintech in the Eye of the Storm

YieldStreet Investors Are Learning the Meaning of High Risk

Emerging Insights on Freelancer Finances During COVID19

As Recession Looms, Brex Stockpiles Cash, Cuts Credit

In a commentary on the cashless economy, monkey goes bananas at Delhi ATM

Golden Retriever Finds Joy In Sliding Down The Hill And People Love Watching Him