Hello Fintech Friends,

It’s your last chance to grab a ticket to our Amsterdam Money20/20 event next week, hosted with Galileo!

You can see all our upcoming events at lu.ma/twif

We also just published our latest Signals insider edition, a piece on alternative assets written by Giorgio Giuliani.

Please enjoy another week of fintech and banking news below.

💬 Quote of the Week

📖 Read of the Week

In every industry there is an elder statesperson whose opinion others accept as sacrosanct, and in fintech the closest is Ayo Omojola, who writes monthly-ish essays dissecting fintech. This month’s focuses on time-to-money, the lag between a transaction being initiated and reaching its destination. As Ayo points out, this revolutionary feature of Stripe and Square (and others like Venmo) is overlooked by richer users to whom timing doesn’t really matter.

This was a big focus of what we were building at Petal, where we focused on credit products for low-income consumers. Many people use credit (expensive) to bridge their time-to-money, whether that’s waiting for a paycheck to be deposited or clear, waiting for an ACH to hit, etc. Having a deep reservoir of savings is the ultimate working capital loan (free, always available), but to about half of all Americans, that is not possible. This is why neobanks that speed up paychecks by 2 days understand their core user set so well. In an era where digital information can move instantly, it is odd that the same is not true for money - and poorer people are usually those who most depend on (and benefit from) fast transaction speeds.

Aaron Klein at Brookings has written extensively on why the US’ Real-Time Payments schema is necessary to combat inequality. The SEC recently proposed moving from t+2 to t+1 settlement to diminish the credit risk taken on stock trades. The financial world is moving slowly towards 0 time-to-money, but until it achieves ubiquity, it will be an underappreciated innovation.

📊 Stat of the Week

Experts alternately assert that either less than 5% of neobanks are profitable, or that 67% of neobanks were profitable in 2021. So maybe nobody knows how profitable neobanks are?

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🏦 Financial Services & Banking

🚀 Product Launches

NatWest launched non-sweeping variable recurring payments and a confirmation of payee API for businesses.

Visa and SMB working capital provider Fundbox partnered to launch the Fundbox Flex debit card.

📰 Other News

Speaking of neobank profitability, JP Morgan expects to lose $1 billion on its newly-launched UK digital bank in its first year. This anecdote demonstrates the massive advantages incumbents can use to compete with fintechs.

Comments that emerged during the CFTC roundtable to discuss FTX’s newly proposed derivatives market framework suggest that one of the large US financial institutions defaulted for a day in March 2020, before emergency liquidity made them solvent again. 👀

National Australia Bank is releasing its own buy-now-pay-later product.

Barclays will close 27 more branches this year.

The Monetary Authority of Singapore will test defi applications in wholesale funding markets.

Banks are stashing $2 trillion in the overnight repo market in a flight to safe assets.

Joint European regulators are pushing lawmakers to give them the ability to revoke the licenses of financial institutions (and fintechs) that violate AML laws (on a related note, check out BBC’s How to Steal a Trillion). Australia’s competition watchdog, meanwhile, sued Mastercard for trying to stifle debit card acceptance competition.

💻 Fintech

🚀 Product Launches

Merge launched its banking infrastructure product for crypto-native businesses.

📰 Other News

Gun companies have been quick to adopt buy-now-pay-later as a method of payment, as bank restrictions meant to protect consumers have forced them to seek out alternate payment methods.

Stripe is taking the partner-with-many approach, enabling its users to embed buy-now-pay-later options from Affirm into their checkouts (following Klarna and Afterpay).

Open banking partnerships for the win! Plaid partnered with Truework to provide payroll income data to expand the latter’s consumer credit solutions. UK neobank Zopa partnered with open banking provider Truelayer to enable account-to-account payments. Consumer loan comparison platform Lenders connected with Nordigen to let users compare loan offers.

Grab is set to launch its Singaporean digital bank in the second half of the year. MoneyLion was approved for a Malaysian digital banking license.

PPS will provide real-time payments for the UK’s post office.

A UK member of parliament attacked Starling Bank over its use of government funds.

Traction is building a Nigerian business ecosystem to stop fake credit alerts.

Lithic published the Lithic Legal Library, a free, open repository of over a dozen legal and compliance templates for starting a card program.

CAT Financial Products and VC Spiros Margaris are partnering on a global fintech investment solution, which I cannot really figure out.

Neobank Varo may run out of money by the end of the year. Nigeria’s GetEquity, a tokenized investment marketplace, came under scrutiny for operating illegally.

German neobank Nuri will lay off 20% of its staff. Crypto exchange Gemini is laying off 10% of employees. Klarna’s CEO was derided for being tone-deaf after publishing a list of fired employees.

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