Fintech Update, 6/29 - 7/5
Hi! It's Monday, July 6, 2020.
DYK: On this day in 1535, Sir/Saint Thomas More was executed for treason by King Henry VIII for refusing to swear allegiance to the Church of England. ...We hope your July 6th goes better than his did.
Leading Off
Apple and Chime launched consumer credit-building programs, aimed at helping younger Americans build positive credit. // Digital wealth management platform Personal Capital sold to Empower Retirement for roughly $1 billion, as fintech exits continue to stay hot in 2020. // Buzzy insurtech firm Lemonade enjoyed the best IPO of 2020, closing the day up 140%. // Meanwhile, U.S. challenger bank Point raised new funding and set its launch date; Transferwise secured an additional license with U.K. regulators to enable it to offer investments products in the future; Stripe rolled out new features; and the U.S. Senate held a hearing on digital payments. // All this + more below!
Heavy Hitters
Two very different businesses roll out credit-building products. Apple kicked off the week by launching “Path to Apple Card,” an opt-in credit-worthiness-improvement program for people who previously applied for but were denied an Apple Card. The tech firm offers users monthly updates on their progress toward their goals, such as resolving past-due balances, inviting them to “reapply to Apple Card” upon completion of the program. Meanwhile, U.S. digital bank Chime launched the Chime Credit Builder Visa Card, a credit product that acts like a debit card by preventing users from spending more than they have in their bank account while still allowing them to build a credit history. Apple and Chime are on opposite sides of the market cap spectrum, yet both have converged on solving the challenge of “young people who can’t quali[f]y for credit,” increasing customer loyalty and improving outcomes in the process.
Personal Capital sells to Empower Retirement. The digital personal wealth management platform announced its sale to the provider of business-focused retirement plan services in a deal reportedly valued around $1 billion. There are notable synergies between the two firms, as “Personal Capital is a consumer service that helps folks plan for retirement . . . [through] free financial tools, and a higher-cost wealth management option for accounts of at least $100,000,” while Empower’s CEO commented that the deal is “a step forward in the evolution of an integrated platform to deliver personalized advice, financial wellness and comprehensive financial planning.” More broadly, the acquisition provides another data point for similar firms such as Wealthfront or M1 Finance that may be looking for comps to price themselves ahead of a new round or exit.
There’s always money in the Lemonade stand. Speaking of successful exits: After pricing itself at $29/share, insurtech startup Lemonade debuted on the New York Stock Exchange at $51/share and closed the day at $68.40/share, about 138% higher than its initial pricing. By the end of the day, Lemonade had logged the best IPO debut of 2020, with sales of 11 million shares taking the firm’s valuation to $3.93 billion. Investor interest in Lemonade is driven by the firm’s reputation as a disrupter in “a centuries-old industry which is still dominated by a handful of traditional names and has been slow to modernise.” The company targets “younger customers . . . whose insurance needs are likely to grow through their lifetimes,” primarily in the U.S., with recent expansion into Germany and the Netherlands.
Quick Takes
TransferWise secures license to offer investment products. The international payments firm received a license from the U.K. Financial Conduct Authority to offer investment products as it gears up to let users “invest passively in investment funds from third-party providers.” TransferWise plans to “launch its first investing feature in the next 12 months” in the U.K., eventually expanding it into other countries.
Point becomes new bank on the block. The U.S. digital banking startup emerged from beta testing, announcing $10.5 million in Series A fundraising and outlining its plan to go live later this month. The firm initially will offer users a checking account, tied to a debit card, offered through its partner, Radius Bank. Point differentiates its offering by giving users cash-back rewards on debit card purchases.
Stablecoins’ market caps surge. Tether’s USDT stablecoin, by some measures, has passed a $10B market cap, representing a ~114% surge in value from the start of 2020. Tether joins Bitcoin and Ethereum in the “eleven figure” club, the first stablecoin to do so. Coinbase’s stablecoin, USDC, a distant second to USDT, has also experienced significant growth since the beginning of the year, gaining over over 100%.
Stripe rolls out new features. The payments company is rolling out two products to help customers manage subscriptions and increase their ability to pay with international bank debits. The new features come as “the pandemic compresses several years of offline-to-online migration into several months.”
Wirecard’s UK and U.S. entities face challenges. The British and American subsidiaries of the troubled German fintech, which declared insolvency last week after a shocking, sudden collapse following the discovery of a multi-billion euro accounting gap, are working to determine their next steps. British regulators gave Wirecard UK the okay to resume operations, while Wirecard US has put itself up for sale.
Australia steps into its open banking future. Australia’s financial regulator formally introduced its open banking rules under the country’s Consumer Data Rights Act. Australians now can have “consumer data relating to credit and debit cards, deposit accounts and transaction accounts” shared across platforms, with “mortgage and personal loan data . . . added from November.”
Senate hears testimony on digital payments. The U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing on “The Digitization of Money and Payments,” featuring former CFTC Chairman Christopher Giancarlo and other witnesses from industry and academia.
Pop Flies
JP Morgan dropped the terms “master” and “slave” from internal tech code and materials.
Digital asset security firm Curv raised $23M in an early-stage funding round.
Monzo founder and former CEO Tom Blomfeld stepped down its board, replaced by new CEO TS Anil.
Apple launched an online portal for Apple Card account holders.
The FT explored why Asia’s online lenders are in trouble as unbanked populations are pushed further into poverty.