Fintech Update, 6/8 - 6/14
Hi! It's Monday, June 15, 2020.
Leading Off
Amazon and Goldman Sachs unveiled a small business credit line, offering up to $1 million for merchants on Amazon’s platform. // Square and PayPal announced new efforts to acknowledge and combat racial inequality. // Millennial-focused insurance unicorn Lemonade filed paperwork to go public with an IPO. // Goldman Sachs’ Marcus shut down deposit-taking after approaching a Bank of England regulatory threshold. // Plus . . . Libra got its first CCO; Affirm and Klarna launched new savings account products; and the WSJ looked at former Treasury officials now shaping fintech policy from the private sector.
The Heavy Hitters
Amazon and Goldman Sachs unveil small business credit line. The e-commerce giant is partnering with the global bank to launch digital credit lines of up to $1 million for U.S.-based merchants on its platform. The product will target small business owners selling items on Amazon’s marketplace, who will receive “targeted invitations from Goldman’s Marcus brand.” The collaboration is the latest example of Big Tech entering the financial services space, including last year’s Apple Card and Amazon’s Credit Builder product. This is the “first time Amazon will let a financial institution make underwriting decisions for . . . sellers on its platform.”
Marcus closes new UK accounts to avoid regulatory threshold. Facing a pandemic-induced surge of deposits that pushed its total deposits up to £21 billion, Goldman Sachs’ retail bank “temporarily” halted new deposits from UK customers. The bank made the move to avoid crossing a £25 billion limit set by the Bank of England, which would require Marcus to “become a separate legal entity with its own board” and keep the money ringfenced from Goldman’s investment banking operations. Over 500,000 people in the UK have opened Marcus accounts since its 2018 launch.
Square and PayPal take action to acknowledge and combat inequality. The fintech firms both announced moves in the wake of the protests for racial equality that have rocked the U.S. and much of the world in recent weeks: On the day of George Floyd’s funeral, Square designated Juneteenth (June 19th, the day celebrating the end of slavery in the U.S.) as a paid company holiday. Meanwhile, PayPal committed $530 million to “support Black and minority-owned businesses and communities in the U.S. . . . to help address economic inequality” and “increase diversity, equity and inclusion.”
Lemonade files to go public. The insurtech firm, which uses an AI-driven platform to sell renters and homeowners insurance to a largely Millennial audience, filed its Form S-1 with the Securities and Exchange Commission ahead of its intended IPO. The paperwork indicates that Lemonade has set a $100 million target for its offering, despite widening losses that suggest the business remains years away from profitability.
Quick Takes
Revolut tightens its belt. Hoping to curb costs, the challenger bank reduced the monthly amount that users can exchange for another currency and doubled fees for weekend transfers on its free plan.
Libra gets a CCO. The Libra Association named Sterling Daines, currently Credit Suisse’s current head of financial crimes compliance, as its first Chief Compliance Officer.
Liechtenstein bank claims USDC payment processing is faster than SWIFT. Bank Frick now allows processing of dollar payments via the USDC stablecoin, which it says is “significantly” faster than SWIFT.
Affirm introduces a high-yield savings account. The point-of-sale installment lender launched Affirm Savings, offering a 1.3% APY, no minimum threshold or fees, and an auto-deposit option.
The revolving door opens into fintech. The Wall Street Journal explores a spate of recent departures from the Treasury’s Office of Terrorism and Financial Intelligence who have taken roles at fintech firms.
The changing expectations for user experience in payments. Industry commentator Peter Ramsey takes a deep dive into payments to understand why challenger banks “wipe the floor with the incumbents.”
Pop Flies
Klarna and Raisin partnered to launch a savings account product in Germany.
Money management platform M1 Finance raises $33 million in Series B funding.
“Digital Islamic investment platform” Wahed raises a $25 million round led by Saudi Aramco.
Fraud prevention startup NS8 raises $123 million led by Lightspeed and AXA Venture Partners.