This Week in Fintech (5/22)

This Week in Fintech (5/22)

Hello Fintech Friends,

This has been a fantastic week for fintech product launches. I could write an entire newsletter just on this week’s launches, probably one on Shopify alone. It’s encouraging to see that economic uncertainty hasn’t stopped businesses from shipping new features.

Last week’s results are in and it looks like the breakaway winner for best fintech debit card design comes from Square’s minimalist signature-engraved black card, followed by the multiple design options from Robinhood and Acorn’s green card. I’ll have to run a March Madness-style bracket at some point with the other ~30+ fintech card designs.

Please enjoy another week of fintech and banking news below. (PS: Long week of news - it may spill over the Gmail inbox limit this week.)

Quote of the week

"Here was when a simple, ordered, highly regulated world began to evolve, for better or worse, into an immensely complicated universe."
  • The Day the Credit Card Was Born, The Washington Post (source)

Open role spotlight

Fintech Today launched a new job board with OneJob, focused specifically on connecting talented fintech employees with prospective employers. For those in the market for a new fintech role, I’d recommend checking it out.

Read of the week

I was discussing some of my favorite long fintech reads with Alex Johnson and decided it made sense to re-share them here. The list features both the favorite books and articles I’ve read (and written) on fintech. I’m always looking for new reads that go very long on forecasting a market or very deep on neatly dissecting one, so please send your favorites my way.

One other interesting read: Built For Mars put together a feature-by-feature comparison of 12 neobank services to see “are they actually any better, or is it all clever marketing?” (h/t Cherry Miao for the find)


Banking and Credit Cards

Reliance Jio, which recently received a raft of new funding from private equity investors (Vista Equity, Saudi PIF, Silverlake, KKR, General Atlantic, and possibly Mubadala), is in talks with the National Payments Corporation of India to bring Unified Payments Interface apps onto its phones (a comp to WeChat instant payments in China). Banking consolidation is eating up the bank ecosystem in India, as consumers migrate their deposits to larger banks.

Interestingly overdue debts at large US lenders are dropping (for now). Banks increased loan loss provisions and are giving extensions on larger debts (mortgages), which means delinquencies on smaller debts (credit cards) dropped last month compared to a year ago. It remains to be seen how long that will last.

Nordea, the Danish bank, launched open banking account aggregation, powered by Tink.

Banque de France and Societe Generale in France and Raiffeisen Bank in Australia are all testing out digital currencies. Blockchain analytics company CipherTrace is now pitching itself to central banks to establish central bank digital currencies.

The closure of bank branches has been a long-timestory on This Week in Fintech. Now, Quartz has put together a tool to help individuals understand the probability their local branch will close. But Singapore’s DBS bank, bucking the downsizing trend, has disclosed it plans to hire 2,000 new employees this year.

Dutch bank ABN Amro will close down its Kendu investment app after customer acquisition did not meet expectations. Australian bank Westpac had surprise resignations from its head of consumer banking David Lindberg and chief information officer Craig Bright. JP Morgan backed out of the bidding group for personal financial management platform Personal Capital.

Successful investor and retail businessman Magic Johnson announced that, through EquiTrust Life Insurance Co., he will provide up to $100 million to fund loans to minority-owned businesses.

A whistleblower is alleging that some of the world’s biggest mortgage lenders, including Wells Fargo and Deutsche Bank, have engaged in systematic manipulation of mortgage funds.

The Treasury and Small Business Administration released the long-awaited details of their Paycheck Protection Program Loan Forgiveness Application and instructions to apply. The Office of the Comptroller of the Currency has suggested a revamped version of the widely embattled special-purpose national bank charter it proposed a few years ago, to offer a ‘payments charter’ to fintechs like Square and Paypal. And the Depository Trust and Clearing Corporation, which provides clearing and settlement services to financial markets after transactions close, is now experimenting with the tokenization of assets on blockchains.

Brazil is the latest country to roll out legislation to promote open banking.

The coronavirus and economic uncertainty will probably delay the rollout of real-time payments infrastructure in markets like the US, where companies formerly focused on RTP now have competing priorities.

Mastercard is opening a lab in Israel to work on fintech innovation and cybersecurity.

A Nigerian crime ring is reportedly perpetrating a massive fraud against state unemployment insurance programs, to the tune of hundreds of millions of dollars, according to the US Secret Service.


Fintech

Product Launches

You could say #ShopifyReunite is going well. This week, the e-commerce giant announced a wave of product launches, many of them expanding into financial services, which have probably inspired their own newsletters. Among the newest product launches are Shopify Balance and Shop Pay Installments. As a refresher on their full fintech product list:

  • Shopify Capital: Lent $1 billion to merchants so far, in ticket sizes ranging from $200 to $1 million.
  • Shop Pay: Their foray into becoming a payments platform for their merchants. 40 million users have now used Shop Pay, which the company claims is 4x faster and converts 2x as well as traditional checkout.
  • Installment payments via Shop Pay, with the option for users to break purchases into 4 even payments at 0% interest.
  • Shop App: Less fintech and more Amazon competitor, with better merchant features and 16 million users so far.
  • Shopify Balance: A business banking account and loans for merchants. No fees or minimum balances. This will include a Shopify customized virtual and/or physical debit card and cash-back cards.

In other product launches Astra, which Andreessen Horowitz has referred to as “self-driving money” released the beta of their Routines product.

Satchel released their ‘store of money’ business banking comparison tool.

Square announced its move into online checkout, to rival Paypal’s dominance in online payment, and Paypal conversely announced its rollout of QR code in-person payments, moving into Square’s turf.

E-commerce platform WooCommerce launched WooCommerce Payments, a native payments option for shoppers, powered by Stripe.

Upstart released their Credit Decision API, to offer its underwriting for auto loans, personal loans, and student loans as a service to lenders. Similarly, Plaid launched its API Exchange to provide open banking APIs “out of the box” to banks.

And Swiss core banking provider SIX launched its open banking tool to standardize the sharing of account information between banks and fintechs.

Other News

Are neobanks overvalued? Monzo is raising a new round from investors at £1.25 billion - up to a 40% discount to its last valuation. It would be unfair to attribute this only to a change in the perception of Monzo’s business fundamentals; the economic downturn has curbed consumer financial activity across the board, hitting bank market caps as well. Still, I have been skeptical of the outsize per-user growth-based valuations that investors ascribed to neobanks and am curious to see if others follow suit. Meanwhile, Monzo CEO Tom Blomfield is changing roles from UK CEO to President and US CEO TS Anil will become UK CEO. And German neobank N26 is readying for an IPO in the next two years.

Tribal Credit (disclosure, where I am an advisor) joinedVisa’s Fintech Fast Track program to partner with the card network to provide credit to MENA startups and Zazu, a Zambia-based mobile wallet, was announced as a Mastercard Principal Member. The announcements show the clear strategic opportunity to expand card networks into more thinly-addressed markets.

Interesting products I came across this week: BrightFi, the $8 monthly subscription neobank; Aspire, a new app-first neobank in Singapore; MaxMyInterest, a smart checking APY-maximization tool; Challenger Cash, which allows businesses to offer white-labeled banking services to their customers; Apruve B2B credit platform; Virgil Card, a new millennial rewards credit card; and Elemental Card, also a premium rewards credit card.

Images of the upcoming Samsung Pay card may have leaked on SoFi Money this week. SoFi meanwhile is cutting 7% of its staff, automating some jobs, and blamed the layoffs on “performance reviews,” hurting former employees’ candidacies for new roles.

In a very interesting partnership announced this week, Ant Financial, the Chinese fintech conglomerate, will invest in and partner with Wave Money, which provides agent-based financial services with 89% coverage of Myanmar. Ant has seen a significant boost in activity, with customer volumes for the superapp up 175%, since the coronavirus shutdown.

State-owned Singaporean investment giant Temasek announced itself as a member of Facebook’s Libra Association this week.

Coronavirus is providing a fast and sudden boost to mobile money providers in Africa. Meanwhile, fintech lenders in Latin America are losing out as non-performing loans surge due to the crisis.

FinTop Capital, a fintech-focused venture capital firm that invests in B2B SaaS fintechs, closed its Fund II for $126 million.

Source: Read more here.


Financings

  • Carta, which provides private companies with cap table management tools and is working on a private share marketplace, raised $175 million in new funding. The company had been rumored to be raising $200 million at a $3.5 billion valuation for a few weeks.
  • Brex, the corporate charge card provider to startups, raised $150 million in additional Series C funding to weather the recession.
  • Neobank Aspiration, one of the first US neobanks which focuses on bringing a socially-conscious element to financial services, raised a $135 million Series C.
  • Homeward, a home purchase lending company that gives applicants a loan equal to the value of their current home equity so they can make an offer, raised $105 million.
  • Wave Money, which operates a mobile money ecosystem across Myanmar, with 57,000 agents covering 89% of the country, raised $73.5 million to expand.
  • Khatabook, an Indian digital business transaction ledger, raised a $60 million Series B to ramp up products and services for Indian merchants.
  • Truework, which provides employment identity verification for lenders and financial institutions, raised a $30 million Series B to grow into new markets. Investor Activant shared thoughts on why they’re investing in rebuilding the identity layer.
  • Deep Labs, which builds transaction authentication and fraud detection systems, raised $16 million.
  • Spark Systems secured a $10.5 million Series B to expand its foreign exchange software into New York and London.
  • Human Interest, a startup 401k provider to small businesses, added $10 million to its Series C.
  • Beeline, a digital home purchase lender that provides 15-minute home loan approvals, raised $7.6 million in ‘seed’ funding.
  • Smarterly, which allows users to make investments directly out of their payroll, raised £7 million to expand throughout the UK.
  • Lingxi, a startup that applies machine learning to debt collection and insurance sales, raised a $6.2 million Series A.
  • Apollo Agriculture, a mobile-based working capital solution for Kenyan farmers, raised a $6 million Series A.
  • Fly Now Pay Later raised £5 million in equity and £30 million in debt to build a travel lending product.
  • Pennylane, a French fintech that provides small business owners and accountants a business admin solution, raised €4 million in funding to boost development of its platform.
  • Minka, a real-time payments platform in Colombia, raised $3 million in funding.
  • Ziina, the “Venmo of UAE,” building a peer-to-peer payment platform, raised $850,000 in pre-seed funding.
  • Monva, a Welsh machine learning financial comparison platform, raised £500,000 via crowdfunding.
  • South Korean fintech Toss is seeking to raise $200 million and considering an IPO in the next two years.

Exits and M&A

  • Shift4 Payments, a Pennsylvania multichannel payments product startup founded in 1994, filed for an IPO to raise up to  $100 million.
  • Deutsche Bank is evaluating the sale of its German digital bank Norisbank, a bank with 550,000 customers acquired in 2006 for €420 million euros.
  • MatchNow, a Canadian dark pool trading platform, was acquired by CBOE Global Markets. Terms were not disclosed.
  • First Abu Dhabi Bank is pausing its $700 million deal to purchase the Egyptian assets of Lebanon’s Bank Audi.

Deeper Reads

Goldman is trying to build a Fintech powerhouse, and this is how they should do it

A different path to self-driving money; Online brokerages compete for new millennial investors

What’s Wrong with Money Management Apps?

What’s a dollar on deposit worth?

An Invisible Coach for Credit Card Debt

Google Pay: I switched from Samsung Pay and haven't looked back

African e-commerce is getting a much needed boost from coronavirus lockdowns

Covid-19: Rise of the 'silver tech' generation?

Puppy brother and sister from the same litter meet on the street