Hello Fintech Friends,
Please find another week of fintech and banking news below.
Quote of the week
“While payments are the first place that embedded fintech has emerged, and they remain an under-tapped opportunity, there are a host of embedded financial services, such as lending, cards, and commercial insurance, that go beyond payments. And we are starting to see additional services, such as payroll and benefits, emerge that can also be embedded rather than resold.”
- Kristina Shen, Kimberly Tan, Seema Amble, and Angela Strange, a16z (source)
Reads of the week
In Monzo: the bank that doesn’t want to be, the Financial Times takes a dark view of the neobank and… I am not entirely surprised? I’ll preface that every Monzo customer I’ve encountered has raved about the product. It sounds like the company succeeded in truly building a frictionless bank UI.
That said, I have been admittedly skeptical of neobank valuations so far. As net interest margins decline and growth rates dissipate, neobanks need to introduce profitable products (lending, subscriptions) that compensate for loss-leaders (checking, savings, FX). But if growth was driven by price shopping to begin with, introducing revenue lines is not as easy as flipping a switch.
Financial Services & Banking
Bank of America has rolled out its mobile wallet capabilities in EMEA and APAC. Zelle, the bank consortium-led Venmo competitor, has seen a boost in usage during the coronavirus pandemic - up 60% over the H1 2019 to $133 billion in transactions.
India is looking to take its successful UPI framework, which facilitated 1.34 billion transactions in June, global. The National Payments Corporation of India is in talks with the Bank for International Settlements, the World Bank and the Bill & Melinda Gates Foundation on possible collaborations
Goldman named internal funding operations MD Mathew McDermott as its new head of digital assets to expand the bank’s crypto efforts. The lawsuit against national student loan servicer Navient for UDAAP violations in its lending was allowed to proceed in Pennsylvania. Capital One was fined $80 million for a 2019 hack. And Fitch cut the US’ rating outlook from stable to negative.
Singaporean superapp Grab launched micro-investing, a loan marketplace and ‘buy-now-pay-later’ functionality. Square launched e-money payments in Japan. Lightspeed and Stripe partnered to offer loans.
Neobank Current launched a rewards program for debit card users, while Point launched its waitlist for a checking and debit card reward account. Revolut launched discount and cashback rewards in Singapore.
MTN launched a pan-African banking API service called Chenosis.
Grand Reserve launched its vertical card account with rewards for wine lovers.
German authorities are asking Russia to help with its search for former Wirecard COO Jan Marsalek. The firm allegedly processed payments for Malta-based mafia laundering operation CenturionBet. Details emerged that Softbank paid a German middleman to broker its $1.1 billion investment into the company. Christopher Bauer, 44 year-old owner of the payments processor at the center of the fraud, was just found dead in the Philippines. And the scandal cost German Commerzbank €175 million in bad loan write-downs.
Global Payments announced its partnership with Amazon Web Services to build a fully cloud-based issuer processing platform for global financial institutions.
Varo Money became the first US consumer fintech to be granted a banking charter. It will move its 2 million accounts from The Bancorp Bank to Varo Bank, N.A.
Galileo and Brex both integrated with Plaid. Stripe integrated with Jobber for instant payouts to home service businesses. Envestnet | Yodlee added Insights Solutions. Swedish open banking platform Tink was profiled in the Financial Times.
Google announced digital banking partnerships with BankMobile, BBVA, BMO Harris, Coastal Community Bank, First Independence Bank, and SEFCU. Elsewhere, Google Pay is now available for 25 new banks in 14 countries.
DayTek Capital was granted an Australian banking license for its neobank Infinity. Transfiya, a peer-to-peer payment service built by Minka and ACH Colombia, has seen transaction volume multiply during covid. Futubull the ‘Chinese Robinhood,’ has seen growth similarly take off - while Robinhood proper doubled second-quarter revenue to $180 million.
Oneal Bhambani joined Kabbage as the lender’s CFO. Wells Fargo’s former head of innovation Peggy Mangot joined Paypal Ventures.
- Southeast Asian superapp Grab, which offers food delivery and financial services, raised a $200 million private equity round.
- Australian installment lender Splitit raised $71.5 million.
- Payments and financial messaging platform Volante raised $35 million in growth equity.
- Global payroll provider CloudPay raised $35 million in growth capital.
- SMB accounting software Candis raised a $14 million Series B.
- Bnext, a Spanish neobank, raised an €11 million to its €22 million Series A.
- Zibo, a banking and rental payment platform for landlords, raised $10.5 million.
- Nigerian e-commerce platform TradeDepot raised $10 million to expand into financial services and credit offerings.
- Kompany, an Austrian know-your-business regtech platform, raised €6m in new funding.
- Fixed income data platform REDD raised $5.8 million.
- Sync., a ‘smartbank’ for linking multicurrency accounts and cards, raised a £5.5 million seed round.
- Orum, an ACH and money-movement programming interface, raised a $5.2 million seed round.
- Planet42, a South African underbanked auto lending startup, raised $2.4 million.
- Lupiya, a Zambian online microloan marketplace, raised $1 million.
- Smartwage, a South African online payday lender, raised $347,000.
- Paymenow, a South African early wage access platform, raised a $230,000 seed round.
- Japanese cashless payments platform hey raised an undisclosed Series E.
- Fraud protection and guaranteed payment provider Vesta secured a strategic investment from EDBI.
- James Alpha Advisors received a strategic investment from asset management holding company Easterly.
Exits and M&A
- The Justice Department is scrutinizing Intuit’s $7.1 billion takeover of Credit Karma, which could eliminate one of the only free tax filing software options on the market.
- Rocket Companies, the re-branded Quicken Loans, priced at the low end of its IPO, raising $1.8 million, but climbing 20% on its first day.
- Black Knight Inc. will acquire mortgage lending marketplace Optimal Blue for $1.8 billion.
- US payments solution provider Paya could be nearing a deal for a direct listing through the SPAC FinTech Acquisition Corp III, valuing the company at $1.3 billion.
- Kabbage is weighing a sale that would value the company between $750 million and $1 billion. (The company has raised about $490 million in equity.)
- Apple is confirmedly buying POS system Mobeewave for $100 million (I laid out why Apple wants to own a POS here.) (Here’s what it means for banks.)
- The UK’s Metro Bank acquired peer-to-peer lender Ratesetter for £2.5 million. (The lender had previously raised £43 million.)
- Mercer Global Advisors acquired Summit Wealth Advisors.
- B2B payments provider Corsair Capital will acquire MSTS, a B2B payments and credit solutions rival.
- London Stock Exchange Group is considering a sale of Borsa Italiana to facilitate its Refinitiv acquisition.
- Franklin Templeton acquired investment manager Legg Mason.
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