Discover more from Fintech Across the Pond
Do you have a growth mindset?
A progressive attitude to failure turns out to be a cornerstone of success for any institution - Matthew Syed
I am currently reading “Black Box Thinking” by Matthew Syed, a book on how to have a growth mindset and uses the aviation industry as a leading example (and the healthcare industry as a bad example!). An excellent read I would highly recommend.
This week has seen lots of news featuring an IPO, a fintech entrepreneur calls for more rules, a digital laggard innovates and an interesting development in embedded finance and alternative credit providers.
If you enjoy reading this, please subscribe and share with your family, friends and other fintech enthusiasts!
Serial fintech entrepreneur and Railsbank co-founder Nigel Verdon has called on the FCA for new provisions for outsourcing companies such as Wirecard to protect client money.
Robinhood raised an additional $320m in its Series F round valuing the company at $8.6bn. The extra funds came from TSG Consumer and IVP making the total for the round $600m.
Transferwise sold a 4% stake to D1 Capital Partners which valued the company at $5bn.
Ocrolus has supported numerous lenders processing 1.3m PPP applications by digitising payroll, bank statements and tax forms to calculate loan amounts, helping small businesses across the country.
Tink, the Swedish open banking platform has acquired Instantor, another Swedish fintech that provides credit decision software to banks and other fintechs.
Monzo announced its new Monzo Plus account, offering account aggregation, credit score visibility, virtual cards, 1% interest on deposits up to £2,000 and free FX withdrawals of £400 per month when abroad. The early version of its plus account was poorly received and swiftly removed from the market so it will be interesting to see customer take up for this new offering. Customers in UK are just not used to paying monthly for a bank account. I suspect the most valuable features will be the interest and FX withdrawals but at a cost of £60 per year, you will only earn £20 in interest (and thats variable so likely to decrease) and you are paying £40 for the FX withdrawals which also seems high.
Lloyds Bank has added the ability to manage and amend subscription services in its mobile banking app, a common value proposition touted by personal financial management apps.
A busy week for HSBC, the digital laggard, which has has rolled out Apple Business Chat, enabling customers to contact them through Messages app on Apple devices, as well as signing a deal with AWS for more personalised banking. With the increase in the use of online chat support during COVID and from call centers, this provides an additional way for customers to contact the bank.
Barclays are partnering with robo-advisor Scalable Capital to create a digital wealth management service for customers with at least £5,000 to invest. This is the first forray by a bank into the robo-advising space with Barclays charging an annual fee of between 1.39%-1.59%. This appears on the face of it to be high compared to the ~0.5% typical fee charged by robo-advisors so it will be interesting to see what else you get for your money.
US banking giant JP Morgan has invested in FitBank, a Brazillian BaaS provider of white label solutions for bill payment, online treasury, transfers and financial management.
British savings app Moneybox raised a £30m Series C after recently hitting £1bn in assets from 450,000 customers. The company is valued at £143m and the round was led by Eight Roads and CNP.
nCino has priced its IPO at $31 per share as it seeks to raise $250m at a $6.9bn valuation
Marqeta has signalled its interest in going public and has engaged investment banks. Tthe company raised a $150m bridge round from investors including Goldman Sachs and Visa, at a $4.3bn valaluation. The deal was advised by FT Partners who are likely to be involved in the IPO. The method of going public will be interesting to see, will the company choose as standard IPO or go the less traditional direct listing route? Or even via a SPAC which are becoming more popular.
In another divergence of policy between the EU and UK, the European Comission has maintained its deadline of 31st December for the introduction of Strong Customer Authenticaion (SCA) rules for online transactions. Unlike the UK which has extended the deadline to September 2021 in light of the COVID pandemic, the EU is unwilling to budge and this could cost merchants €90bn in lost sales. SCA demands two-step verification process for online purchases over €30 to combad fraud.
Visa is trialing instalment payments, entering the fast growing “buy now pay later” market dominated by Klarna, valued at over $5bn. Questions remain over regulation and promotion of the new industry and fears that customers don’t fully understand the cost of what they are signing up for, similar to the payday loan market.
Bond Financial Technology, the platform which connects digital brands with banking partners raised a $32m Series A from Coatue, Canaan, Goldman Sachs, Mastercard and B Capital. Bond’s platform is a designed to facilitate the embedding of financial products within digital brands which is set to be a huge growth area for fintech.
Long reads and listens
Michael Lewis’s Against the Rules episode titled “The Coach in Your Head” looked into the mental side of coaching and how a tennis coach built a toolkit for firefighters, musicians and softball players. Check it out.
Fintech investor Nigel Morris spoke about the need for banks to build out their digital strategies, with a focus on small and mid-sized banks which are furthest behind in digital innovation.
Finextra highlights new alternative credit providers such as CreditLadder, Aire, Lenddo, Credit Kudos and Nova Credit.
11FS detail the current state of retail payment options in North America and South America with some interesting stats on P2P.
Startup of the Week - Pinwheel
Pinwheel is an API platform that connects to payroll systems, enabling customers to easily switch their direct deposit (DD) and provides up-to-date income and tax verification to partners for loan approvals. Additionally they help lenders take repayments directly from a borrower’s paycheck, making it easier for the borrower to pay and reduces default risk for the lender.
Pinwheel came out of stealth mode earlier this week announcing $7m seed round from First Round Capital and Upfront Ventures.
This is another API platform in the already hot API space and allows for greater management of one’s DD to make switching bank accounts easier but the B2B potential is massive. Think of Pinwheel as Plaid but for income verification (recall Plaid was bought by Visa for $5bn+ in late 2019). Many companies offering financial products would love an easy way to verify a prospective borrowers income to make credit decisions quicker, espeically when it comes to “gig economy” workers whose untraditional income volatility eliminates them from most mainstream financial institutions.
Another very interesting development that will help accelerate the embedded finance wave!
Please get in touch to share your thoughts and comments!
Follow me on LinkedIn and enjoy your weekend.