This Week in Fintech (2/12)

Hello Fintech Friends,

We’re looking forward to the next round of fintech geo deep-dives! (For those who missed the last round, you can see the videos here.)

Judging by our survey responses, the most in-demand areas are Southeast Asia (20% of votes), the MENA (16%), Canada (15%), Australia (13%), and China (11%). If you know any speakers qualified to present on fintech in these areas, please reach out.

Please enjoy another week of fintech and banking news below.

💬 Quote of the week

“Bank lobbyists and executives say a priority will be persuading the incoming administration that tech giants such as Facebook and Google, as well as upstart fintechs, should not be allowed to provide services that compete with banks.”

Robert Armstrong, Mark Vandevelde and Laura Noonan, Financial Times (source)

📖 Read of the Week

Two articles published over the last week, Why checkout is the next e-commerce battleground and The Battle for the Checkout, explore the progressively more crowded competition to own the checkout page.

These days, it feels like checkout solution news is breaking daily - just this week, Shopify expanded its proprietary solution, Shop Pay, to Facebook and Instagram so its merchants can sell there directly. A week ago, Stripe led a $102 million round into checkout solution Fast - even though Stripe offers its own hosted checkout. And this is not to comment on the explosion in buy-now-pay-later alternatives competing to wrest the checkout away from traditional cards.

Why the rush to own checkout? The businesses that are best-poised for growth sit at the intersections where transactions happen. Sleek checkout experiences could increase the number of online purchases (as Stripe says, increase the GDP of the internet) and provide an opportunity to collect a commission on every purchase. As more people turn to the internet over physical stores, and look for easier solutions than manually entering their credit card numbers, the size of this pie will continue to grow. Not only that, but if these platforms offer digital wallets with stored balances, they can process transactions without running them over credit or ACH rails (called ‘on-us’ processing), reducing the cost to process transactions and increasing margins.

This competitive dynamic is why AmEx, Discover, Mastercard, and Visa have spent the last three years developing Click to Pay. The companies that own online payments stand to benefit enormously from the growth of the internet. May the slickest checkout experience win.

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🏦 Financial Services & Banking

🚀 Product Launches

Bank of America rolled out its own Plaid integration.

Barclays added digital receipts from Flux to its mobile bank.

BNY Mellon launched a crypto custody service.

City National Bank and fintech Extend partnered to launch a Visa commercial card and platform.

📰 Other News

US banks continue to lend less and less of their money as a share of assets.

Brazil’s real-time payments system, Pix, started the first of four implementation phases this week and had banks and fintechs immediately rush to sign up. US real-time payment system Zelle announced that users sent $307 billion over 1.2 billion transactions in 2020.

Mastercard will bring crypto onto its network. Visa created predictive AI tools to help banks evaluate when funds transfers will settle.

Estonia’s LHV Group is applying for a UK banking charter. Marcus reopened its 0.5% APY accounts to UK savers. (Elsewhere, Goldman Sachs is winding down its PFM acquisition, Clarity Money, to focus on Marcus.)

The Chinese central bank has partnered with SWIFT to create the Financial Gateway Information Service, with $12 million in capital, in an effort to promote adoption of China’s digital currency internationally. The Bank of Canada is accelerating its work to develop a digital currency. The St. Louis Federal Reserve is tackling decentralized finance.

US Bank’s Housing Capital Company partnered with fintech Built to digitize construction payments. Dutch Rabobank will cut 5,000 jobs and downsize its branch network.

💻 Fintech

Moov, which is building open source infrastructure to develop the next generation of financial services, is hosting fintech_devcon September 8-9 in Denver.

🚀 Product Launches

Klarna moved into N26’s territory, launching consumer bank accounts in Germany.

Blair launched a $100 million income share agreement facility for students at non-traditional schools.

📰 Other News

PayPal plans to flesh out Venmo this year to look more like a neobank - with budgeting, savings, and bill pay - along with a merchant-funded offers platform via Honey and a cryptocurrency trading service via Paxos.

Digital payments startup Ukheshe partnered with Kenya’s KCB Bank to drive digital payments adoption in east Africa. Spreedly and Visa partnered to accelerate network tokenization in Latin America. Global Payments and Google announced a cloud services partnership. PayPal and e-commerce platform Digital River partnered to add PayPal’s Pay in 4 solution to checkout. CleverCards joined MasterCard’s Fintech Express Program.

Jiko gave one user $47,000 cash back on a $4.7 million IRS debit payment.

Square’s clearing broker for Cash App resumed Gamestop and AMC trades.

Amazon is preparing to launch a digital currency initiative in Mexico. Apple was granted 'Apple Card' and 'Apple Cash' trademarks in Canada, bringing it one step closer to launching in the country. As fintech competition in India intensifies, PayPal is shutting down its domestic payments business.

Nigeria’s Providus Bank shut off digital payment services for startups like PiggyVest and Monnify. To quote Hayden Simmons, "Sometimes it feels like Nigeria doesn’t deserve Nigerians, who keep pouring their souls into trying to fix such broken infrastructure..."

Ten South African fintech startups were chosen to participate in the $665,000 AlphaCode Incubate program. Djamo is a fintech player building a WeChat-style financial superapp for francophone Africa. Moyalo wants to be the ‘Uber of savings.’ And Airtel Africa made 10% of its $2.87 billion revenue from mobile money in 2020.

Finch Capital announced its third fintech fund, of €150 million. Siam Commercial Bank launched a $50 million DeFi fund. Crypto exchange Kraken launched a fintech venture fund. Corporate spend startup Ramp secured a $150 million debt line from Goldman Sachs. Onfido returned its £5 million grant from RBS’ bailout fund.

Carbon Zero is a credit card that helps users track emissions impact. Interprime manages startup balance sheet cash via a roboadvisor.

Barclays’ fintech accelerator, powered by Techstars, announced its class of 2021. Monzo recruited Carol Nelson, former CEO of Cascade Bank, as CEO.

Robinhood is opening offices in New York and Seattle, as the controversial platform was hit with a wrongful death lawsuit following the suicide of an investor. RobinWho?

(Source)

📜 Policy

Courtesy of Ben White at Plaid.

Banks challenged fintech’s use of Durbin exemptions, by which some fintech companies partner with smaller banks in order to gain access to higher interchange fees.
The Treasury Department held a two-day meeting on financial innovation, where Secretary Janet Yellen focused on the misuse of crypto as a growing problem.
The House Financial Services Committee added hedge fund CEOs Ken Griffin (Citadel) and Gabe Plotkin (Melvin Capital) to the list of witnesses for their Feb. 18th hearing on meme stocks and retail trading.
The European Central Bank is reportedly considering capping the amount of funds consumers can push into Central Bank Digital Currencies, to avoid a run on retail banks.
Financial institutions are pushing the regulatory spotlight onto technology companies, leveraging their helpful role in weathering COVID and consumer concerns on tech power.
The CFPB is reportedly probing Venmo’s debt collection practices and recourse mechanisms for unauthorized transfers.
The Australian Competition and Consumer Commission (ACCC) raised some flags with comments about banks acquiring fintech challengers.

🔎 Weekly Deep-Dive

Need a deeper dive? This week on Fintech Brainfood, the fintech stack and how to make the most of it including:

Who are the providers?
How are they being unbundled and re-bundled?
What do you need to make the most of this environment?
Also: A breakdown of new start-ups like Balance, and why mortgages are 2021's 🔥 product.