Discover more from Fintech Across the Pond
Square seeks to ride the TIDAL wave.
Tweet of the week 🦉🏆
This week’s news cycle belongs to Square. It has been a busy time for the company recently but the biggest piece of news was that it is purchasing a majority stake in Jay-Z’s music streaming service TIDAL for $300m. This is great news for artists as they will become the second largest shareholder in the company and Mr Z will join the Square board.
Whilst the synergies might not be obvious, there is likely to be a lot of user overlap between the two. Square has done a great job with marketing Cash App as a cool company and has partnered with artists for its Cash App Friday giveaways. The addition of a music streaming feature will only increase user engagement with the app and further blur the lines between financial services and culture. As Anish Acharya at a16z tweeted “Banking is increasingly an expression of consumer preference and personal style.”
Square positioned itself as empowering small businesses and there is no smaller business than the individual creator. With this acquisition Square is positioning itself with a partner for individual music artists, will further acquisitions target other creators like influencers or gig workers? Cash App could be set to become the leading financial services app for the creator economy.
In other Square news, Square Financial Services got started this week almost a year after its bank charter was granted. The new bank structure will give Square greater control over its financial products and likely will improve margins. Square’s stock initially jumped 7% on the announcement but has now reversed the gain. It also reported Q4 earnings where it mentioned Cash App’s CAC had fallen to an absurdly low $5.
No need to HODL with Square as I would not bet against Jack or the company. Maybe Jay-Z will wear Cash App’s latest line at his next red carpet event. Or give them a hand on the merch side!
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There were 15 deals in the fintech space across the US and Europe with total investment of $250m. Some highlights are below.
🇪🇺 Remagine, a non-dilutive financing and business bank account provider, raised $24m in seed funding from angels including former head of Google Payments and former COO of Venmo.
🇬🇧 Starling Bank has raised £272m at a £1.1bn valuation led by Fidelity Investments and included the Qatar Investment Authority.
🇬🇧 Countingup, a business bank account and accounting bundle provider raised £9.1m led by Framework Ventures.
🇬🇧 Codat raised strategic investment from PayPal Ventures and American Express Ventures who have joined the previously announced Series A.
🇺🇸 TaxBit raised a $100m Series A led by Paradigm and included Coinbase Ventures, Tiger Global, Winklevoss Capital, PayPal Ventures and Anthony Pompliano.
🇺🇸 First Boulevard has raised $5m in seed funding from Anthemis, Barclays and Point72 Ventures for its neobank focused on the Black community.
🇺🇸 Cardlytics, an ad platform, is buying Dosh, a cash-back and card-linked offers platform for $275m. Dosh has partnerships with Venmo, Betterment and Ellevest.
🇺🇸 Futurefuel, a white-label student debt toolbox, has raised $10m in a round led by UBS and included Aflac, Fiserv, Salesforce Ventures and Vulcan Capital.
🇺🇸 PayPal is holding talks to buy digital asset firm Curv for up to $500m
🇺🇸 Eco, a cryptocurrency payments platform, has raised $26m in a round led by a16z and included Coinbase Ventures, Founders Fund and Slow Ventures.
🇺🇸 Flourish, a savings reward platform, has raised $1.5m in seed funding from GVAngels, First Check Venture and Brazil firm Canary.
Challenger Banking 🚀
🇪🇺 Data crunched by AppAnnie for Sifted highlighted the dominance of PayPal as the most downloaded app.
🙌🏻 FATP Take - This doesn’t come as a huge shock as PayPal is one of the original fintechs during its EBAY ownership, helping to provide trust in e-commerce in the late 90s and early 2000s. PayPal still dominates the e-commerce space to this day as I recently found out when researching for The Battle for the Checkout.
🇬🇧 In a push towards users paying for accounts, Revolut made its free account less attractive with additional fees and trading costs for investments, reducing the delta to its £2.99 Plus account according to Everly. This is in a week in which the company is losing four department heads in Marketing, Business product, Support and Growth.
🇬🇧 Marks and Spencer, a popular UK retailer and financial services provider with 3m customers, is shutting its current accounts and in-store branches in a shift towards more digital products and services
🇺🇸 In a big coup, Walmart has recruited the Head of Goldman Sachs’ consumer brand Marcus to run its fintech startup joint venture it announced recently with Ribbit Capital. Omer Ismail is bringing David Stark, Apple Card head, to the new venture also.
🙌🏻 FATP Take - This news set Fintwit alight with what it might mean for Walmart and Ribbit’s upcoming venture. Great thread of Walmart’s history in fintech from Matt Janiga.
🇺🇸 Betterment is buying Canadian fintech Wealthsimple’s US customer accounts which adds $190m in assets and nearly 20,000 customers.
Traditional Banking 🏦
🇪🇺 BBVA has announced Aqua, a card without numbers or a CVV. The dynamic numbers must be checked via an app to enhance security for users and the card has a debit, credit or prepaid mode.
🇬🇧 HSBC has launched HSCB@Home, an education program to ease the transition to online and mobile banking
🇺🇸 JPMorgan is looking to sublease 800,000 sqft of office space in Manhattan as it re-evaluates its commercial real estate needs. This trend is expected to be a theme for the next few years as although many companies will return to physical offices post-pandemic, workers are unlikely to return full-time and more flexible solutions are needed.
Fintech Infrastructure 🚧
🇬🇧 Roisin Levine, Head of Banks at Flux, a previous FATP Startup of the Week, announced they have delivered 4.5m digital receipts (+250% YOY), onboarded 120,000 customers in a week and reported that customer Monzo saw a 63% increase in engagement on Flux’s digital receipts than standard.
🇺🇸 The income/payroll API space is 🔥 right now and Alex Johnson writes about why here and this week an API infrastructure company, Plaid, announced its new income verification product. Shopify also launched Shopify Capital for Payroll, enabling them to quickly get funding to expand teams.
🙌🏻 FATP Take - Targeting the use of payroll data in lending, Income as it is called, provides an easy way for users to verify their income to secure loans, qualify for mortgages, lease cars etc. This is Plaid’s second Payroll product in quick succession after Deposit Switch was announced in late January.
🇺🇸 Plaid also announced a partnership with banking infrastructure platform Unit to make moving funds between end-customer accounts on Unit’s platform and external bank accounts seamless.
🇺🇸 Modern Treasury announced the release of ACH Reversals as part of its payment product, helping systematise the current manual process.
🇺🇸 The cloud battle for financial services is heating up with Microsoft launching its Financial Services Cloud later this month as it looks to compete with Amazon, Google and IMB for the bank’s infrastructure needs. It is late to the party so needs an innovative approach to win customers
🇪🇺 Kevin., a Lithuanian startup is providing a way for merchants to switch card payments to account-to-account payment at checkout.
🇬🇧 UK chancellor Rishi Sunak delivered his budget last week which included an increase in the contactless limit from £45 to £100 providing a boost for merchants concerned that new European Strong Customer Authentication rules would mean higher rates of abandoned transactions due to onerous authentication requirements.
🇬🇧 Unified global payments company Apexx is providing an aggregated product to make it faster and easier to allow merchants to add a choice of multiple BNPL options
🇬🇧 Modulr, the payments-as-a-service platform has been chosen by Intuit Quickbooks to power its new payment account for small businesses
🇺🇸 Stripe signed SaaS giant Atlassian to its Stripe Billing subscription product
🇺🇸 In a worrying development, Dustin Curtis reported that a missed payment on an Apple Card caused Apple to disable his iCloud, App Store and Apple ID account. This is one of the downsides of having a number of services tied to one provided in a closed ecosystem.
Regulatory Corner 🔎
🇬🇧 Last week the much awaited Kalifa report was released. Check out my highlights here.
Longer reads 📜
Payroll Data + Fintech - Alex Johnson
Income rules everything around me - Rohit Sharma
Power to the Person - Packy McCormick
APIs are Everywhere - An Intentional Choice: Being API First - Amias Gerety, QED & Nate Soffio, Wharton
21st Century Lending - Yusuf Ozdalga
Fintech Brain Food - Simon Taylor
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