Fintech Update, 5/18 - 5/31
Hi! It's Monday, June 1, 2020.
Welcome to the new and improved The Fintech Update. We're thrilled to be in your inboxes and excited to show off our new branding and formatting. Please check out our updated site and Twitter page, and forward widely to any friends or colleagues you think might be interested. As usual, keep an eye on your inbox for our weekly updates as well as periodic Big Ideas, where we take deep dives into some of the biggest developments shaping tech and financial services now and in the coming decade. Bear with us as we work out the kinks of our new media in the coming weeks; and as always, we'd love to hear from you!
Best, Team TFU
Leading Off
Kabbage said it’s processed $3.5B in PPP loans, a significant comeback after suspending its small business lending amid the early days of the coronavirus crisis; Samsung and SoFi jointly launched a cash management account and debit card; Google is piloting voice confirmations for payments; payments startup Marqueta raised $150M; and Square’s Cash App saw a surge in direct deposit customers, suggesting a potential avenue to offer more consumer banking services.
The Heavy Hitters
Kabbage sees PPP-related rebound. The lender said it has processed $3.5 billion in Paycheck Protection Program (PPP) loans after temporarily suspending its small business lending in late March amid fears of customers’ ability to repay due to coronavirus. The halt on lending led Kabbage to seek government assistance and its recent uptick in loan processing follows lobbying efforts to gain approval to help disburse the $660 billion in funding earmarked for PPP.
Shopify announces new products. At Reunite, the virtual conference for merchants that use its platform, the e-commerce firm announced several new products including “Shopify Balance,” a fee-free merchant debit card with no minimum balance, and a “Buy Now, Pay Later” feature to support payment installment plans. Shopify plans to launch both products later in 2020.
Plaid launches new API product. The financial data processing firm, which was acquired in January by Visa for $5.3 billion, launched the Plaid Exchange, providing bank clients with “API connectivity in a box.” Plaid’s press release noted that the Exchange service will offer institutions “an open finance platform that includes everything they need to manage the data connectivity [that] customers demand.” Plaid expects its new service to “help small and mid-size banks accelerate their digital transformation and connectivity."
Samsung and SoFi launch cash management account. The tech giant and online lender partnered to create “Samsung Money by SoFi,” a “mobile-first money management experience” that offers consumers a cash management account and Mastercard-serviced debit card, plus “exclusive benefits to Samsung Pay.” The service, which follows other recent moves by Big Tech firms like Apple and Facebook into financial services, will offer users fee-free, interest-bearing accounts with the “convenience of mobile payments and the control of a debit card.”
Monzo co-founder steps down. The digital bank’s chief executive and co-founder Tom Blomfield is stepping down as the popular fintech faces strong pandemic-related headwinds. Blomfield will become Monzo’s president, a role he says will help him “unwind [his] involvement . . . in more formal regulated banking activities.” The move follows Monzo’s 40% valuation drop.
Quick Takes
Google tests voice confirmation for payments. The tech giant is piloting a feature that lets people authorize purchases with their voice using its Assistant tool.
PayPal sees rise in “silver tech.” Amid continued virus-related lockdowns, the online payments giant’s “fastest-growing [user] segment” between March and April was users over 50 years old.
SoFi cuts 112 employees. The online lending firm eliminated 112 positions, or 7% of its staff, citing outputs from its recent performance reviews.
Marqeta raises $150M. The payments startup brought in $150 million in a Series F round, more than doubling its previous valuation to $4.3 billion.
Brex raises $150M. The startup-focused credit card provider raised $150 million in a Series C extension, which it plans to use “to invest across engineering, product, and design functions.”
Tencent to invest $70B in fintech. The Chinese tech giant behind WeChat plans to invest nearly $70 billion in AI, blockchain, and other fintech development over the next five years.
HBR looks at stablecoins. Asking whether stablecoins are “the next big thing in e-commerce,” the Harvard Business Review concluded that several conditions would need to align: technology, consumer demand, corporate champions, and an amenable regulatory environment.
Will the crisis accelerate Square’s move into consumer banking? After encouraging people to sign up for its service in order to get access to their federal stimulus funds faster, Square’s Cash App has seen a surge in direct deposit customers.