Hello Fintech Friends,

This week I caught up with some former colleagues now at Marqeta, Worldpay, Stripe, Salesforce, and Recurly in-person to talk about the future of payments innovation. It reminded me how valuable it is to be able to have these kinds of conversations in-person. In-spite of all the future of remote work hype these days, I think working face-to-face will still ultimately win out.

Open role spotlight

Vayu, a stealth-mode startup founded by former Bread Finance CTO/COO Daniel Simon, is looking to hire a Fintech Product Manager in New York.

Financings

• Scandinavian challenger bank Lunar raised a €40 million Series C and plans to enter the buy-now-pay-later lending space.

• UK challenger bank Lanistar raised £15 million in new funding.

• Silent Eight, which uses machine learning to combat financial crime, raised a $15 million funding round.

• Mexican challenger bank Klar raised a new $15 million round of funding.

• Freelancer-focused challenger bank Lili raised a $15 million Series A.

• Zest AI, which offers software for lenders to evaluate risk in their models, raised $15 million in funding.

• Possible Finance, a short-term installment lender working to disrupt the payday lending space, raised an $11 million round.

• Pulley, which is building a cap table management tool to rival Carta’s, raised a $10 million Series A from Stripe.

• No-code AI platform Signzy announced a $5.4 million strategic investment from Mastercard.

• San Francisco startup Kettle launched to create a reinsurance product that predicts losses from wildfires, and raised $4.7 million in seed funding.

• Wirex, which offers a contactless card for crypto payments, raised £3.7 million in a crowdfunding campaign.

• Cloud-based card payments processor Silverflow announced a €2.6 million seed round.

• insha, a German neobank that gives users access to financial services that align with moral principles (such as Sharia-compliant products), raised a €2.5 million seed round.

• PayByCar, an in-vehicle payment platform, raised a $2 million pre-seed round.

• FinLocker, a personal finance manager, announced an equity investment from Transunion and new commercial partnership agreement.

• Global Processing Services, a payment processor that works with neobanks, announced a strategic investment from Visa.

• Point-of-sale platform PredictSpring raised a strategic investment from Salesforce Ventures.

Exits and M&A

• Ant Financial’s dual listing was given regulator approval in Hong Kong this week; the firm is expected to raise $35 billion.

• Australian shareholder registry firm Link turned down a A$2.76 billion takeover offer from Carlyle Group, but is open to other buyers.

• Chinese wealth management fintech Lufax will seek up to $2.36 billion in its US IPO.

• First Citizens Bank announced that it will buy CIT, in a deal valued at $2.2 billion that will make the combined entity the 19th largest bank in the US.

• Sun Life Financial will pay $338 million for a controlling stake in Crescent Capital.

• Mortgage lender and servicer AmeriHome will IPO, at a valuation of up to $1.3 billion.

• Mortgage company Guild announced an IPO priced at $15 per share.

• Mortgage originator Caliber Home Loans will IPO, offering 23 million shares at a price range of $14-16 per share.

• American Equity Investment Life Holding Co. announced that Brookfield will acquire 20% of the business for $37 a share - a 15% premium on the stock price.

• Payments platform Syncapay acquired the North American assets of collapsed payment service provider Wirecard.

• Private equity firm Thoma Bravo will acquire financial risk management firm AxiomSL.

• Canadian mortgage business Filogix acquired Doorr, a point-of-sale mortgage application software.

• Financial information service Factset announced its acquisition of Truvalue Labs to expand its ESG data offering.

• Moody’s Corporation announced its acquisition of Acquire Media to strengthen its KYC offering.

• Lee Equity Partners will acquire Simplicity Group, a financial products distribution business, from Aquiline Capital Partners.

• Accounts receivables payment service providers Versapay and Solupay announced that the two companies will merge.

• PayPal is said to be in advanced talks to buy a crypto custody firm, including with BitGo, as it adds cryptocurrency functionality for its users in 2021.

• Wells Fargo is exploring a sale of its asset management arm.

• Allworth Financial is expected to sell itself soon to Lightyear Capital and the Ontario Teachers’ Pension Plan.

• Deutsche Bank is looking to sell IT services division Postbank Systems, possibly to India’s Tata Consultancy Services.

SPACs

• Payments service provider Billtrust announced that it will go public through a merger with the South Mountain Merger Corp SPAC, in a deal valued at $1.3 billion.

• Payments firm Paya will go public through a merger with FinTech Acquisition Corp III.

• Fintech SPAC Lefteris Acquisition filed to raise a $225 million IPO.

• Yellowstone Acquisition, a SPAC targeting the financial services sector, raised $125 million but sold fewer units than expected.

Hello Fintech Friends,

Please find another week of fintech and banking news below.

Quote of the week

“Fintech companies should prioritize consumer financial security, in turn rendering their products and services more profitable, scalable, and marketable.”

• Mae Watson Grote, CEO, Change Machine (source)

Read of the week

The FDIC this week published its Survey of Household Use of Banking and Financial Services, with surprising results on the progress of the US financial services industry in saturating the needs of Americans. Only 5% of households are now unbanked, from 7.7% in 2009. Still, these rates are notably higher in minority communities: 14% of African American and 12% of Latinx households are still unbanked, highlighting the important work still to be done by banks and fintechs to make sure that financial services are a universally available right, not just a socially segmented benefit.

Sponsored Content

SentiLink heads to Money 2020 next week where CEO, Naftali Harris, joins panelists from the Federal Reserve of Boston and FinCEN to discuss synthetic fraud and the next frontier in KYC. SentiLink continues to team with industry, government and regulatory professionals in the fight against synthetic fraud. Please contact Naftali Harris at naftali@sentilink.com for more details.

Financial Services & Banking

Product Launches

The thematic news this week regards simplifying how merchants can accept consumer payments. Chase is wading into the peer-to-merchant payments market with a competitive product offering to Square and PayPal, with the launch of its QuickAccept combination mobile app and contactless card reader, which will let businesses cash out credit card payments to their accounts instantly for free. Not to be outdone, Visa introduced Tap to Phone to allow android phones to be used for accepting NFC payments (something that Apple will probably do via Mobeewave).

Citi launched ‘True Name’ cards for transgender cardholders to reflect their genders via Mastercard. Massachusetts-based PeoplesBank will launch a digital bank via core provider Nymbus. Google Pay and Axis Bank in India co-launched their ACE consumer credit card.

In exciting news for open-source banking, Finos and Goldman Sachs have launched their data management and governance platform, following pilots with international banks.

Other News

As China becomes the first country to distribute its own central bank-backed digital currency to consumers, the World Bank, IMF, and G20 are coming together to draft a framework for digital currency rules.

Mastercard will trial biometric cards that use fingerprints to authenticate transactions in Asia and partner with Stride to provide employment benefits to gig economy and contract workers. Visa is partnering with PayPal on debit push payments.

India’s Icici Bank will now let customers create fixed deposits, pay utility bills and access trade finance via WhatsApp. Japanese banks Fujitsu, JCB and Mizuho Bank are testing a joint digital identity interoperability system. Australian bank Westpac added Afterpay’s BNPL loans to its fintech banking-as-a-service platform. RBC Capital Markets is piloting an AI-powered trading platform. HSBC added contactless donation boxes to its Canadian branches. Royal Bank of Scotland released a digital currency for its R3 Corda blockchain network. Italy’s SIA and crypto platform Hex rolled out a digital asset custody solution.

Visa has added fintech Ternio to its Fast Track program in order to enable blockchain financial capabilities. Bank of Canada is the latest central bank looking into digital currencies, with a new digital currencies economist role open. The CFPB put out an advance notice of proposed rulemaking on Dodd Frank 1033, which could impact the ability of fintechs to access consumer data to improve their access to financial services.

US Bank will close 400 branches over the next year. In-spite of its lawsuit against Plaid, TD Bank credits its success and ability to weather the pandemic to its partnerships with fintechs...

Fintech

Product Launches

PayPal will add cryptocurrency to its product features, in a big sign of validation for the technology (and pitting it head-to-head with Square’s Cash App). While the initial product rollout will just be the ability to buy, hold, and sell digital currencies, the company plans to add the ability to use crypto to pay its 26 million global merchants in early 2021. (Similar to Robinhood, users will own hold crypto balances but won’t actually hold the tokens themselves.)

Acorns partnered with online job market ZipRecruiter to enable users to apply for jobs directly within the fintech app. Clickswitch launched its verification of employment and income solution. Deel launched a service to give employees their paychecks 30 days in advance.

Japanese tech company Line joined Thailand’s Kasikornbank to launch a social banking platform in Thailand. In India, Paytm launched a same-day settlement facility for funds transfers on its payment gateway service.

Monzo continues to drift away from its no-fee beginnings, launching a new £180 premium member subscription with a metal card that costs £50 to produce. Yolt, the account aggregation app that enables centralizing bank information, also launched its own spending account and card. Varo, the US neobank, introduced Varo Advance, which allows users to take out loans up to $100 for a $5 maximum fee.

Google Cloud launched a tool that uses machine learning to speed up the mortgage application process. Ocrolus added a cross-document validation tool for borrower applications.

Ant Group launched a blockchain copyright protection network in advance of its IPO.

Other News

Payments, and especially consumer-to-business payments, increasingly feel like an innovation-led race to the bottom in pricing. Trilo, a new payment initiation-focused open banking startup in the UK, wants to wrest consumers away from sticky credit cards by using rewards to incentivize bank-to-bank payments, which would reduce payment fees for merchants. This comes as retailers in the UK are attacking card networks for their fees, as consumers switch from cash to cards (for reasons that may have to do with PayPal’s move into crypto…)

In partnerships, digital brokerage Altruist partnered with Apex Clearing to offer a better investing experience to independent financial advisors. Card consolidation platform Curve partnered with core banking provider Thought Machine to build a new credit and loan product. The Financial Health Network, JUST Capital, Good Job Institute, and PayPal partnered to make employee financial health a priority for businesses. Banking software provider Galileo and savings and checking startup Save partnered. Safeway is using Fiserv to power its proprietary Safeway Pay solution.

Agility Bank, a woman-owned digital community bank in Houston, received conditional approval from the OCC and FDIC to launch. Lockstep, a “connected accounting cloud,” emerged from stealth. UK fintech Mode, which IPO’ed in the UK, allocated 10% of its cash reserves to bitcoin. Singapore is luring fintechs with special visas and financial support. Baltic fintech startup SME Finance is planning to launch its own neobank.

Bella is banking for people who care about each other. Linus is a crypto banking account with a 4.5% APY. Lucky Card may win you money when you use your credit card.

Source: Optima

Deeper Reads

Fintechs drive financial inclusion during the pandemic

The Future of Small Business Lending

The Promise of Payroll APIs

Soon enough, Wall Street will have to take millennial investors seriously

Why Fintech is the Future of Banking

6 fintech trends that will redefine the future of finance

Year-over-Year Transaction Trends Update

A brief guide to starting and building a lending business

New research suggests the coronavirus could live on cash, pushing consumers toward digital payments

Nigerian snake ate millions of naira, clerk says

In Chile, 25 Rare Chinchillas Are Sitting on Top of 3.5 Million Ounces of Gold

Hello Fintech Friends,

I’m excited to announce some of the speakers we’ll feature at our Fintech Geo Deep-Dives on November 13th: Vaibhav Puranik and Ankit Singh (India), Mike Packer and Mark Heynen (Latin America), Sumi Das and Alex Johnson (US), Simon Taylor (Europe), Danielle Chike-Ogwo and Stone Atwine (Nigeria and East Africa), and Mohamed Okasha (MENA).

Open role spotlight

Nova Credit, building a platform to enable lenders to access cross-border credit data, is hiring a Head of People.

Financings

• Canadian roboadvisor Wealthsimple raised C$114 million in new funds at a $1 billion valuation.

• Razorpay, an Indian business payment processing startup, raised a $100 million Series D.

• NYDIG, an investment management solution for digital assets, raised $50 million in growth equity from backers including Fintech Collective.

• M1 Finance, a platform for automated investing, borrowing, and banking products, raised a $45 million Series C.

• Extend raised $40 million from investors including PayPal Ventures to bring its extended warranty product to consumer purchases.

• Finexio, the ‘accounts payable as a service’ platform, raised $23 million.

• Argyle, an API platform that provides visibility into employment status and payroll, as well as direct deposit-switching, raised a $20 million Series A.

• Spendesk, a French B2B spend management software, announced it added an $18 million Series B extension.

• Commission-free white-label brokerage platform Alpaca raised a $10 million Series A.

• Aumni, a provider of automated investment analytics for private capital markets, raised a $10 million Series A.

• Tiltify, working with creators to build a crowdfunding platform, raised a $6.5 million Series A.

• Tugende, an SMB asset finance company in Uganda and Kenya, raised a $6.3 million Series A.

• Clair, which provides free instant payroll to hourly and gig economy workers, raised a $4.5 million seed round.

• NowPay, an Egyptian employee financial wellness platform, raised a $2.1 million seed.

• Fivestars, a small business payments and point of sale service, raised a combination of equity and debt for its Series D.

• Standard Chartered made an undisclosed investment in passwordless authentication platform Secret Double Octopus.

• N26 is evaluating funding at a valuation north of $3.5 billion in 2021.

Exits and M&A

• Kaspi, a Kazakhstani fintech that operates a payments business, an e-commerce superapp, and the country’s third largest bank, IPO’ed on the London Stock Exchange at a market cap of roughly $6.5 billion.

• Stripe announced its acquisition of Nigerian fintech Paystack, which provides payments integration services both online and offline by API to African businesses. This was an exciting deal to wake up to, and hopefully signals the significant potential for expansion of financial services platforms into new markets.

• Following its acquisition of E*Trade earlier this year, Morgan Stanley continued to push into wealth management with its $7 billion acquisition of Eaton Vance.

• Mode Global Holdings, which makes the UK neobank Mode, plans to list on the London Stock Exchange at a valuation of around £40 million.

• Auto lender First Investors Financial Services will merge with private equity investor Gallatin Point.

• And it’s off! Yandex failed to reach terms to acquire online bank Tinkoff and ended its $5.48 billion takeover approach.

SPACs

• Finance of America, a consumer lender owned by Blackstone, will go public at a $1.9 billion valuation through the SPAC Replay Acquisition.

• Kingswood Acquisition, a SPAC targeting a financial services acquisition target, filed to raise up to $150 million.

Source: The Economist

Deeper Reads

What Ant Group’s IPO says about the future of finance

Your Cash Earns Zip, Zilch, Nada. Don’t Make It Worse.

Colombian fintechs fill Latin American banking gaps

To Lend or Not To Lend

PayPal CEO Dan Schulman Explains His Strategy For Investing In Employees’ Financial Health

The Square Opportunity

Which neobanks will rise or fall?

Buy Now Pay Later for dummies

Adopted Aussie Koolie dog rescues over 100 koalas from wildfires

Hello Fintech Friends,

This does more or less sum up my year…

We also published our second Q3 Signals this week, analyzing bank and fintech exits and M&A over the last quarter.

Please find another week of fintech and banking news below.

Quote of the week

“The very earliest example of lending dates back to over 4,000 years ago in Mesopotamia, 2,000 BCE, where farmers bought seeds on credit and repaid the debt after the harvest.”

• Rohit Sharma, A look at the Buy Now Pay Later (BNPL) players (source)

Read of the week

In Banking as a Service: the future of financial services, 11:FS’ Simon Taylor provides a great investigation into what it means for the provision of banking services to move from banks into embedded products on other platforms. It’s true, traditional bank revenue sources (NIM) have increasingly been under pressure, while fixed costs (branches) are only now being cut. It will be interesting to see whether legacy banks choose to go where their customers are and embed their services in other platforms.

Sponsored Content

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Financial Services & Banking

Product Launches

Garanti BBVA, the Turkish bank subsidiary, launched Bonus Diji, a rewards-based credit card that stores card numbers, expiration dates and CVV codes on its companion mobile app rather than the card.

Bank of America is on a roll. After last week’s launch of Life Plan, its PFM, the bank introduced micro-loans of up to $500 in increments of $100 for a flat $5 fee through its customer Balance Assist feature and three new APIs to support real-time data access in corporate treasury.

Chase launched Chase First Banking, a feeless checking account for kids and teens that can be co-managed by parents.

Other News

JP Morgan pledged a $30 billion investment over the next 5 years to fight the racial wealth gap in the US.

The People's Bank of China is beginning to distribute the country’s new digital currency, starting with a lottery of 10 million yuan ($1.5 million) to 50,000 recipients in Shenzhen.

Commonwealth Bank of Australia integrated fintech Credit Savvy’s credit scoring functionality into its mobile app. Deutsche Bank will partner with fintech Elastic to provide an early warning system for customer transaction settlement delays, and will also become the first European bank approved for China’s Pilot Scheme for Facilitation of Foreign Exchange Receipts and Payments for Trade.

The Financial Stability Board published a roadmap to improving slow cross-border payments. The Justice Department is revisiting its bank merger guidance to factor in online lenders, in light of the growth of fintech. The Federal Reserve is looking for participants to pilot its FedNow real-time payments network, a rival to The ClearingHouse’s RTP. The Monetary Authority of Singapore is establishing a Green Finance Centre.

Wells Fargo fired over 100 employees accused of improperly collecting coronavirus relief funds for themselves… The US continues to look into banning Ant Group and Tencent payment system usage in the country. The OCC fined Morgan Stanley $60 million for failing to properly decommission two wealth management data centers. European ATM losses from its ‘black box’ fraud, in which a device can trigger dispense commands, have passed €1 million.

Fintech

Product Launches

Clearbanc launched a new inventory financing feature so that e-commerce companies can only pay for inventory upon delivery to customers. PayPal launched a new three-month interest-free installment loan product in the UK to compete with Klarna.

SoFi debuted an ETF that provides a weekly distribution every Friday. 

German search engine Ecosia partnered with British fintech Treecard to launch a debit card. Designer Philippe Starck designed a “smart ring” for storing and making payments.

Other News

French fintech superapp Lydia partnered with Tink to enable its open banking features. Neobank Revolut is planning to apply for a US bank charter with the Federal Reserve Bank of San Francisco. Greenwood, the black-owned challenger bank for the black and latinx community, passed 100k sign-ups in its first week. Pennyworth, a neobank founded by ex-Barclays employees, filed to become an authorized UK bank.

Rapyd and InComm Payments partnered to allow billers to accept cash payments.

The Wirecard fire sale continues: Bulgarian fintech Paynetics acquired the company’s corporate payout card portfolio in the UK and Ireland.

Frustrated Robinhood customers are being targeted by criminals who drain their accounts, and struggle to reach customer service in time to stop it. The company estimates hackers infiltrated over 2,000 accounts. Fraud rates and theft are surging on consumer payment apps generally, as faster funds access creates an opportunity for fraudsters. TD Bank ramped up its ongoing disputes with Plaid, suing the aggregator for mimicking its website brand in its bank login screens.

Nigerian lending fintechs are bearing the brunt of the pandemic, as they begin to experience high default rates, and a hack of mobile money solution Pegasus Technologies in Uganda has led to losses of at least $3.2 million as local banks deal with the fallout, leading to a nationwide police chase.

A fintech green accelerator launched. Mojo Mortgages, Moneybox, Plum, and Wagestream won Nesta’s £1.5 million open banking competition.