Discover more from Fintech Across the Pond
How is your financial health?
Tweet of the week 🦉
This is an awesome thread about biases in product teams that I would urge anyone working in product to read. Some great insights into why products fail, and it usually isn’t because the product cannot be built.
This past week seems to have had a financial wellness theme which is well timed as I am finishing up a longer form piece somewhat tied to financial wellness and personal finances. Credit scores are being challenged by a new dynamic type of measure by Harvest and Ron Shevlin wrote a great piece on financial wellness and the work of the Financial Health Network.
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Recent News 📰
🇬🇧 UK data shows an increase in use of open banking, with 1 in 5 of survey respondants using online banking apps during lockdown and 54% regularly using them. There are two million active monthly users and growing!
🇺🇸 Great list of The Most Powerful Women in Finance from American Banker. Not much representation from fintechs which backs up data highlighted by Deloitte that women make up only 7% of fintech founders worldwide.
🇪🇺 BitPanda, an Austrian fintech has raised a $52m Series A from Speedinvest, UNIQA Ventures and Peter Thiel’s Valar Ventures to expand across Europe. BitPanda provides a trding platform for digital assets.
🇺🇸 NY based Rally Road has raised $17m in a Series B from Reddit co-Founder Alexis Ohanian, Upfront Ventures, Porsche Ventures and Global Brain to name a few. Rally Road gives users the ability to trade shares in collectible assets such as classic cars and sports memorabilia.
🇺🇸 MineralTree, a B2B accounts payable company has raised $50m in a Series D round from existing investors .406 Ventures, Eight Roads and Great Hill Partners as well as aqcuiring two companies in the accounts payable and B2B payables space.
🇺🇸 Alkami, a cloud-based digital banking platform for smaller banks and credit unions raised a $140m round led by D1 Capital Partners and includes Fidelity Management & Research, Franklin Templeton and Stockbridge Investors.
🇺🇸 Payroll company Gusto has expanded horizontally to add financial services to its products. Businesses on Gusto’s platform can provide employees with spending accounts, college savings and 401(k)s to route pre-tax earnings for long-term financial health. Link.
Challenger Banking 🚀
🇬🇧 One area that seems to be lacking with digital banks is customer service. With digital products, there is no branches to visit and often no phone number to call. The FT reports on another worrying story of a Revolut customer struggling to recover his £150,000 bank transfer.
🇺🇸 Credit Karma has launched a no-fee checking account and debit card through a new platform Credit Karma Money. Credit Karma is in the process of being acquired by Intuit for $7.1bn.
🙌🏻 This new product increases the penetration of Credit Karma into the lives of its users, who already use its services to access their credit scores and receive personalised credit cards and loans. I LOVE this move by the company as it could bring personalised products directly to consumers in a proactive manner. This will certainly shake up the challenger banking space and gives CK a unique value prop in addition to spending data which can be used to improve its recommendations. It’s savings account is provided through MVB Bank so they might have partnered with them again for this.
🇺🇸 Harvest is aiming to take on the credit scoring system with its own PRO Index (PariFi Rating & Opportunity Index) by creating a dynamic view of personal financial wellness throughout the lifetime of a loan. It uses ML and AI to map out a financial plan for users based on credit score, income and spending patterns and can automatically negotiate bank fees and interest charges.
🇺🇸 Current was named “Challenger Consumer Bank of the Year” by Tearsheet. Current focuses on people overlooked by traditional banks, serving Americans living paycheck to paycheck. A market of 130m Americans. Link.
🇺🇸 Step, a Stripe backed teen focused mobile banking launched this week. The app boats celebrity investors Will Smith and Nas and has used TikTok star Charli D’Amelio in its launch. This will be a good source of data on conversion fom TikTok.
🙌🏻 Companies like Step which target teenagers are playing the long game and attracting users early in their financial lives to monetise later. With no fees and a lack of immediate cross-selling opportunities, Step is be looking to build a longer-term relationship which will be profitable down the line as its users get old enough to think about credit cards etc.
Traditional Banking 🏦
🇬🇧 TSB bank is to close a third of its branches and layoff 900 employees in response to a shift in consumer behaviour.
🇺🇸 Harit Talwa, who has led Goldman’s Marcus unit, has been promoted to Chairman of Goldman’s consumer business and his protege, Omer Ismail is becoming global head of the consumer business starting in January. American Banker reports Marcus has 5m customers, behind the 8m of Chime and on par with MoneyLion.
🇺🇸 JPMorgan is partnering with Affinity Capital Exchange to create financial assets from loyalty points. With $500bn of loyalty currencies in circulation, airlines, hotels and other operators can realise the value of their points portfolios from investors.
Fintech Infrastructure 🚧
🇪🇺 Germany based Deposit Solutions has launched in the US, allowing banks to offer third-party deposit products to their customers through existing accounts. An exciting solution for both banks and third-party deposit providers to easily expand. The company is backed by Deutsche Bank, Greycroft, Peter Thiel as both an angel investor and through his firm Valar Ventures.
🇪🇺 Samsung is teaming up with Visa and Solarisbank to enable Germans to link any bank accounts to its contactless mobile payments service.
🇺🇸 Plaid released Plaid Link, a more secure and easy way for users to connect their financial accounts. Link.
🇺🇸 California based identity verification and KYC firm Jumio has acquired the AML platform of Beam Solutions. This space is hotting up with the increasing shift to digital channels for financial services.
🇺🇸 Mastercard is urging merchants to add their logos to their fraud platform Ethoca, to reduce dispute’s by consumers. The logos will give increased clarity to consumers over which transactions are genuine without having to spend time reviewing statements. Transaction data is sparse and confusing often and I think this is a great solution and could also help PFM apps with categorisation.
🇪🇺 European rules on Strong Customer Authentication could block more than a third of online purchases, resulting in $100bn in lost sales. This is 100x the amount of card fraud. The smaller merchants will be the hardest hit.
🇪🇺 Swift is moving into the remittance market by providing member banks the ability to make instant transactions across borders. Swift will be utilising its gpi which ensures speed, tracability and transparency for international payments and allows banks to provide customers with a better payments experience.
🇬🇧 TransferWise has turned a profit for the year ending March 2020 as well as reporting a 70% rise in annual revenue.
🇺🇸 Amazon launched Amazon One, a palm reader to enable contactless payments in stores or entering a stadium. Ben Thompson at Stratechery digs into this in detail and I highly recommend reading. It is not clear about the privacy concerns if palm print is stored in the cloud and not locally like Apple does with Touch ID and Face ID.
🇺🇸 Square is launching QR codes for eateries using Square Online for self-service ordering. QR code can be scanned and ordered through mobile ordering page and should see table turn times increase and decrease staff costs.
🇺🇸 Target is launching a buy now pay layer serice with Sezzle, the installment payments platform.
🇺🇸 Amex and Amazon have joined forces to offer co-branded credit cards to UK SMEs. The two products allow SMEs to either earn rewards or adjustment payment terms on certain products.
Regulatory Corner 🔬
🇺🇸 Congressman Stephen Lynch is worried about the risks of “too-big-to-fail” fintechs on the topic over the OCCs fintech and payments charter efforts. He makes a point that laws and regulations are struggling to keep pace with technology in finances. The same could very easily be said about traditional financial institutions however.
Longer reads 📜
How fintech can help the financial health crisis - Ron Shevlin
🙌🏻 A must read from Ron. Financial services have a great power make our lives better but also cause a huge amount of stress and challenges. Covid has only increased the instances of the latter. Many people struggle with their finances and lack the tools to make financial decisions. Fintech has a role to play to make things easier and it needs to step up. I will be dropping a longer special edition post on my thoughts of what this might look later this week.
Fintech for Gen Z and Millennials - a16z Podcast
🙌🏻 Student debt is wildly out of control. Amira Yahyaoui of Mos is trying to help by providing an easy way to allow students to apply for every government college financial aid program in a single application. It would be great for something like this to be picked up by SoFi, althought it would undermine their main business. This would also fit in nicely with Credit Karma, a digital bank or a personal financial management app.
Square Valuation - ARK Invest
Startups of the Week ⭐🇺🇸🇬🇧🇪🇺
🇬🇧 Clausematch is a UK based compliance platform to organise data and enable collaboration and knowledge-sharing. Estimating to cut compliance costs by 30% by removing duplication and reducing approval times, this could be what the industry needs after the FinCEN files. From experience I know the issues in dealing with compliance, the burden it places on institutions but also the importance of rigorous compliance checks. Clausematch has raised just over $10.5m to date from investors such as Index Ventures and Speedinvest as well as some angels.
🇬🇧 Primer provides a unified API for merchants to consolidate their splintered payment ecosystems. As companies grow globally, there are increasing burdens on teams looking to incorporate payments for new countries. The founding team have deep payments experience from Braintree and PayPal. Primer has raised just under $5m to date from Balderton Capital, SeedCamp, Speedinvest, Kima Ventures and TransferWise founder Taavet Hinrikus.
Please get in touch to share your thoughts and comments!