Hello Fintech Friends,

As we come to the close of the decade, I’m wondering what people find to be the most important fintech innovation of the last 10 years? Which financial technology, now that you have it, can you not live without?

For me, it’s probably mobile peer to peer payment services like Venmo or a group expense tool like Splitwise.

Quote of the week

“I think cash is gonna be with us for a long time. But I do think it's inevitable — that all forms of money are going to eventually digitize.”
- Dan Schulman, Paypal CEO

Open role spotlights

No new roles to highlight this week.

Read of the week

Fintech journalist and economic historian JP Koning digs up an old read from 2005, Who Killed Paypal?, and notes that Paypal's early aspirations were to “help the poor and wrest control of currencies from corrupt governments.”

In banking and credit card news, HSBC is launching its own digital ‘challenger bank,’ named Kinetic, to offset the competitive pressure of neobanks such as N26 and Monzo.

Mastercard took time this week to promote its new Fintech Express platform, meant to win the business of the growing fintech product category with streamlined business support to help startups get to market faster. Mastercard will also offer cards aimed at facilitating transgender and nonbinary customers by letting them use display names different from their legal names.

Transunion data shows that credit issuers expect continued growth in consumer use of credit for purchases through the holiday season, and growth in private-label credit card issuance. This comes even as banks this week claim they tightened standards on new cards in Q3.

The European Central Bank, at the behest of the EU, will look into developing its own fiat digital currency (promising inasmuch as it eradicates rather than creates a siloed payments system, I’ve argued). This comes as twenty other European banks join together to develop a rival payments system to Visa and Mastercard and offset the payments-dominance of Chinese and US tech companies; an initiative known, charmingly, as Pepsi (Pan European Payment System Initiative).

The UK’s Financial Conduct Authority rolls out new rules to prevent ‘buy now, pay later’ lenders (such as Clearpay) from charging backdated interest at the end of promotional offer periods. EU banks and payment networks, meanwhile, will have to work with authorities to hand over consumer purchase data in order to combat Value-Added Tax fraud.

The bank lobbying group Independent Community Bankers of America unsurprisingly supports the dissolution of the ILC bank charter regulatory model that allows fintechs to offer digital banking services. The American Bankers Association, meanwhile, came out in support of the Federal Reserve’s plans to build a new real-time payment and settlement service slated for 2023. (Remember that RTP bank consortium Early Warning, the maker of Zelle, is against the Fed proposal due to the competitive pressure it would put on Zelle.)

India’s YES Bank this week launched a developer sandbox with 50 APIs for fintechs to build on top of the bank’s platform. The State Bank of Pakistan unveiled a nationwide digital payments strategy meant to boost financial inclusion and move toward cashless payments.

Finally, in Zimbabwe, national banks have given customers access to low-denomination banknotes, but consumers are still angered by low $20 daily withdrawal limits.

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Now onto fintech news this week, which is dominated by big tech companies (including the FAANGs) expanding into financial services. Fintech commenters have predicted for years that large tech providers would enter consumer finance. We may be seeing early signs of that, but given hit-or-miss prior initiatives, it’s too soon to tell whether this trend will have staying power.

Facebook this week announced a payments service, Facebook Pay, that will allow users to make payments across all its platforms: Messenger, Instagram, and WhatsApp. The early supported payment types are peer-to-peer, payments for fundraisers, in-game purchases, and event tickets. Facebook Pay will still run on the credit card and Paypal rails that consumers already use. (This consolidation of Facebook’s payment functionality - which it has offered since 2007 - is notably separate from its proposed crypto token, Libra.)

Apple and Goldman Sachs came under fire this week when a prominent programmer tweeted that he and his spouse had been offered different credit limits. The tweet led to a Goldman probe, statement, and comments from all sides including the New York Dept of Financial Services and Sen. Elizabeth Warren. Without wanting to spend much more time on it, it’s worth noting that organizations like Goldman use highly-vetted underwriting systems (both internal and third-party) that are heavily tested for regulatory compliance. It’s very unlikely that credit discrepancies derive from protected class, especially given that variables like gender aren’t even application inputs. Penny Crosman at American Banker does a great job at taking a broader view of the situation.

It was also revealed this week that Google will begin offering co-branded checking accounts in partnership with Citibank and Stanford Federal Credit Union. The company aims to “bring value to consumers, banks and merchants, with services that could include loyalty programs, but [won’t] sell checking-account users’ financial data.” As Matt Levine notes, the back-end financial and compliance functionality will still be provided by the banks, not Google.

In an Axios on HBO interview this week, Paypal CEO Dan Schulman revealed that Paypal plans to make a push into physical retail under its Paypal and Venmo brands, possibly leveraging programs like its new Venmo Rewards, split payments, or skipping the checkout for in-store purchases.

Alipay, previously reserved for the exclusive use of Chinese nationals, is beginning to show its hand when it comes to international expansion. After launching its Alipay-lite functionality for foreigners in China last week, it this week announced a new goal of serving 10 million European small businesses by 2024. As Chinese consumers travel internationally, this may become a more compelling value proposition for merchants. It remains to be seen whether Alipay begins to challenge card networks like Visa and Mastercard outside of China as well. Chinese conglomerate Tencent also announced plans this week for a digital bank (with blockchain technology) licensed out of Hong Kong.

Former Airbnb Growth PM Lenny Rachitsky offers sensible growth advice for fintechs in this Tweetstorm. (h/t Ian Kar)

In verticalized fintech news, restaurant management tech company Toast is getting into lending, launching Toast Capital to lend its merchants (and following Grubhub’s lead). And healthcare industry lending company Loan Doctor announced the launch of a new 6% APY online high-yield CD account.

Earnings from Square’s subscription and services business, especially the Square Cash App, led to a 68% jump in earnings and higher-than-expected revenue in Q3.

The government of Singapore is considering extending the funding for its fintech subsidies beyond 2020 to foster more growth in the sector. Australian challenger bank 86 400 this week unveiled a new digital mortgage platform. And Georgian neobank Space aims to expand its mobile bank internationally with a new Visa partnership.

Though our focus is on fintech and not crypto, worth noting that capital inflows into Decentralized Finance have doubled over the past year.

It’s not really fintech, and I don’t know what to do with it, but people keep sending me this, so here it is.

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Financings

• Online and mobile payments solution Spreedly raised a $75 million growth investment to
• Mobile payments startup Palmpay closed a $40 million seed round (!) to expand its service to Nigeria and target becoming Africa’s largest fintech.
• Eigen Technologies, which provides an ML engine for banks to extract insights from complex contracts, raised a $37 million Series B.
• Mortgage process digitization startup Snapdocs closed a $25 million Series B to invest in AI.
• Danish white-label expense management platform Cardlay announced $10 million in new funding and a partnership with Swedish card issuer Eurocard.
• Florida-based receivables management fintech DadeSystems announced a $9 million Series D to support growth.
• Brokerage-as-a-service builder Alpaca landed $6 million for its Series A to commercialize fintech development of trading apps.
• German digital debt capital markets platform Acatus raised a €5.5 million Series A to continue expanding into new markets.
• UK accounting and invoice collection platform Chaser raised $4 million in growth funding to build out its product development team.
• Popwallet, which automates marketing to mobile wallets, announced seed funding of $4 million.
• AI-powered ‘smart savings’ app Plum closed a $3 million investment to expand its app across iOS and Facebook Messenger.
• Visa invested in a minority stake in Nigerian payments processor Interswitch, in a round that values the company at over $1 billion.

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Exits and M&A

• Estonian bank Coop Pank AS plans to raise €37 million in domestic IPO.
• Australian payments provider EML is acquiring the Irish firm Prepaid Financial Services for £226 million upfront with an earn-out of £55 million.
• OneConnect Financial Technology, a Chinese financial platform backed by Ping An Group, filed with the SEC for a $100 million US IPO.

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Deeper Reads

How Fintech’s Third Wave Will Change How You Bank

Shares in students: nifty finance or indentured servitude?

China fears weigh on launch of Hong Kong virtual banks

Online banking isn't just for millennials anymore — it's quickly becoming the norm

“The sick state of the nation’s finances isn’t technology’s problem to solve.”

The Banks Have Gone Mad and the System is Broken (Hackernoon; warning, strong language)

Plastics Still Matter to Payments (Fiserv profile)

Doggie door is no match for chunky cat