Cash free Super Bowl.
Tweet of the week 🦉
I really like this take from Leslie of Female Founders Alliance. She hits the nail on the head on the downsides of bootstrapping for too long. While it is often something that startups strive for, they miss out on demonstrating how they can maximise spending for learning. Very few startups can scale solely by bootstrapping so at some point you need to demonstrate you can efficiently spend investor dollars for maximum value.
The NFL and partner Visa announced the Super Bowl will be a cashless event due to Covid concerns. It is hard to imagine the event taking place at full scale anyway but there is a lot of money at stake so who knows. If more large scale events adopted this approach, waiting 30 mins for a drink during your favourite sports or music event could be a thing of the past!
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Recent News 📰
Funding 💸
🇪🇺 Mintos, an alternative loan investment platform raised €5.3m on Crowdcube in 24 hours.
🇪🇺 Square, Tencent and others have invested €93m in mPOS company Satispay.
🇬🇧 Griffin, a banking-as-a-service provider, announced a £6.5m round led by EQT.
🇬🇧 PensionBee is planning to list on the London Stock Exchange at a £300m valuation for a company which has £1.2bn in administered asset from 65,000 customers.
🇬🇧 Modulr, a payments-as-a-service platform has secured £9m in investment from Paypal Ventures.
🇺🇸 Financial Venture Studio has closed a $13m debut fund.
🇺🇸 Famed US VC firm Andreessen Horowitz has raised $4.5bn across two new funds, bringing their total AUM to $16.5bn.
Challenger Banking 🚀
I came across the above image this week which I thought was a great display of the origins of many challenger fintechs across the globe. Many started with just one focus but all are quickly rebundling as they search for profitability.
🇬🇧 OakNorth has gained Sumitomo Mitsui Bank as a customer of its credit intelligence platform and also received a £30m investment as well.
🇬🇧 Starling Bank hit breakeven in October this year 🥳.
🇬🇧 Sugi, an app that allows users to see the carbon footprint of their investments has launched in the UK.
🇬🇧 Monument, a mass affluent challenger bank picked Mambu, Salesforce and AWS for its technology build.
🇺🇸 Uber is hiring “across the board” to restart some financial service related products according to Johnie Lee, Uber’s engineering lead for financial products. This comes months after Uber announced it was de-prioritising financial services in June and after its recent partnership with card-issuing fintech Marqeta.
🇺🇸 PayPal is partnering with Even Financial to let its employees access their salaries early and use its budgeting tool.
🙌🏻 FATP Take - I have a post coming out on the employee financial wellness space so keep your eyes peeled for it.
🇺🇸 Another week and another two neobanks launched, this time its Douugh moving out of beta to officially launch and Daylight, an LGBT+ banking platform.
Traditional Banking 🏦
🇪🇺 Santander has acquired technology assets from Wirecard’s European merchant business for €100m, with 500 employees moving over.
🇺🇸 Big news this week with PNC buying BBVA’s US business for $11.6bn. BBVA has made great strides in creating an open banking platform and also owns challenger bank Simple, so it could turn PNC into a fintech powerhouse. Or it could snuff out any innovation.
🇺🇸 Google has rolled out a BIG update to Google Pay which includes digital bank accounts, called Plex accounts, through Citi and Stanford Federal Credit Union (yeah I had to Google them too), card-linked offers and spending transparency. Great review from The Verge.
Fintech Infrastructure 🚧
🇬🇧 Atom Bank is partnering with accounting platform Codat to speed up SME lending.
🇺🇸 Banking-in-a-box is almost here courtesy of a new partnership between Moven and Q2. It enables traditional banks to launch a digital bank within 30 days.
🇺🇸 Akoya, spun off from Fidelity earlier this year and owned by 11 banks and The Clearing House, landed US Bank as a customer, as the industry switches from screen scraping to API data access ahead of potential action from CFPB. Akoya provides a single entry point for third party apps and aggregators such as Plaid/Yodelee.
Payments 💰
🇺🇸 Mastercard has added A2A payments to its Track business payment service and is already live in the US but ROW will be live by the end of 2021. Key question is when this comes to merchants selling to consumers.
🇺🇸 Chase is giving credit card customers a BNPL option for purchases over $100 with no interest, for a fixed fee through a program it calls “My Chase Plan”
🇺🇸 Affirm dropped its S1 in preparation for its IPO. See here for John Street Capital’s take.
Regulatory Corner 🔎
🇬🇧 Earlier this week the FCA issued a scam warning against influencer marketed Lanistar, a challenger bank with a new debit card, but following their agreement to add disclaimers in its marketing, it has removed its warning. Weird turn of events. This has Fyre Fest 2.0 written all over it.
🇺🇸 In a surprise move the DOJ gave Mastercard the greenlight for its acquisition on Finicity. This was a stark contrast to its decision to try and halt Visa’s acquisition of Plaid.
Longer reads 📜
How Chime is dominating digital banking - Ron Shevlin
🙌🏻 FATP Take - Ron does a great job at breaking down why Chime has seen the most success and it boils down to the basics, providing value for a specific customer segment, in this instance, lower income Americans. It was potentially the easiest segment because the current offering for this group was so bad. Chime needs to show they can cross over and attract other segments if their success is to continue.
E-commerce surge rekindles debit fee fight between merchants and industry - American Banker
🙌🏻 FATP Take - After the DOJ brought the debit market into focus with its attempts to block Visa acquiring Plaid, it seems banks and merchants are also squabbling. The Fed has rules to give merchants at least two unaffiliate networks to route transactions but when consumers pay without entering a PIN, this doesn’t always happen as some large banks debit cards don’t allow merchants to route transactions through different networks, other than Visa/Mastercard. Seems like the rules should apply to all card transactions, PIN or not.
Twilo increases its authorisation rates by 10% with Stripe - Stripe
🙌🏻 FATP Take - A 10% uplift in payments authorised is HUGE and can really move the dial in terms of profitability for a company.
How CCaaS will shape the future of the $4trn US Credit Card Market - Dov Marmor, RailsBank
Is Klarna lending responsible? - Robert Collings
🙌🏻 FATP Take - The BNPL space is 🔥right now but I have mixed feelings. As a user, I try to not spend beyond my means and putting purchases on a credit card and paying it off at the end of the month works for me. I like the regular cadence of a monthly card bill. Splitting that payment over a longer time period you made it harder to track spending and budget. I also believe it has potential to encourages more irresponsible spending, not dissimilar to payday loans. The data doesn’t show this and suggests a majority of BNPL users might just be using it to delay paying for something they otherwise could afford but I am still cautious and prefer the easy management of a credit card. Klarna could also be in trouble in the UK by breaching GDPR according to The Times.
Startup of the Week ⭐🇺🇸🇬🇧🇪🇺
You can check out last month’s featured startups here.
🙋If you are working on any exciting fintech startups, I would love to connect with you so drop me a message.
Lendflow allows vertical SaaS companies to embed lending into software solutions to create stickier users and increase profitability. It is a fully integrated lending platform to connect end users with capital through an API.
We have already seen with Finix how embedded finance, in their case payments, can add value to SaaS companies and the lending space could be even larger. Toast, the restaurant POS, launched Toast Capital to leverage its unique insights into a customers operations to offer lending solutions and this model can be leveraged in many industries such as construction, transport and we have already started to see it with Shopify and Square in e-commerce.
It was launched in August 2019 by Jon Fry and has yet to announce any funding.
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Michael