Fintech Update, 7/6 - 7/12
Hi! It's Monday, July 13, 2020.
DYK: Live Aid, the star-studded global concert held simultaneously in London and Philadelphia to raise relief funds for the Ethiopian famine, was held on this day in 1985? Phil Collins famously played both shows live, flying the Concorde to the U.S. after finishing his set in the UK.
Leading Off
SoFi is trying again to get a bank charter, applying this time to the U.S. OCC for a national charter. // Buzzy bank software firm nCino released its target price for its upcoming IPO, before revising the target up $5 per share. // In fact, IPOs appear to be having a moment, with China’s Ant Group, crypto exchange Coinbase, and payment card issuer Marqeta all considering their own public offerings. // Meanwhile, the Wirecard rabbit hole only got deeper; Deutsche Bank paid a big fine to New York State for its dealings with disgraced financier Jeffrey Epstein; Brex expanded its product offerings; and TransferWise is nearing a $5 billion valuation.
The Heavy Hitters
SoFi applies for national bank charter. CEO Anthony Noto announced that the online lender filed an application with the Office of the Comptroller of the Currency (OCC) for national bank charter. The company had previously filed for an Industrial Loan Charter (ILC) in 2017, but withdrew the application the same year. If approved, SoFi would be able to hold customer deposits and make loans without relying on a bank partner, delivering “enhanced value and more products and services.” SoFi’s new attempt at a banking license comes amid the growth of encouraging regulatory signs, including Square’s successful second attempt to gain ILC approval, Varo’s national bank charter approval from the OCC and FDIC, and the OCC’s fintech-friendly Acting Comptroller, Brian Brooks.
nCino prices and revises IPO price range, targets $2.5B valuation. On the heels of Lemonade’s highly successful IPO, the bank software provider filed an S-1 with the Securities and Exchange Commission, indicating an intention to sell 7.625 million shares at a share price range of $22-$24, valuing the firm at about $2 billion. Only two days later, nCino raised its target price to $28-$29 per share, pushing its valuation target to roughly $2.5 billion. nCino’s Bank Operating System software connects financial institutions’ front, middle, and back office employees with clients and third parties across lines of business and delivers data analytics and insights into their operations. The firm’s software is utilized by over 890 financial institutions and nCino projects a run rate of $178.9 million for this year.
Heck, IPOs all around! The IPO surge doesn’t stop with nCino: China’s Ant Group (formerly Ant Financial) reportedly is planning to IPO in Hong Kong later this year, targeting a valuation of over $200 billion. Meanwhile, another Chinese fintech firm, online property brokerage Beike Zhaofang, is planning to IPO in the U.S. later this year, targeting a $20 billion valuation, which would be “the largest listing of a Chinese company in the U.S. in more than two years.” Speaking of American IPOs, San Francisco-based crypto exchange Coinbase reportedly has “started plans for a stock market listing that could come as early as this year, making it the first major U.S. cryptocurrency exchange to go public”; while fintech card issuer Marqeta is lining up “investment banks to advise on a potential initial public offering” that would come in 2021. The firms appear to be investigating the possibility of IPO among a growing wave of fintech public offerings “by companies seeking to capitalize on the market’s recovery in the aftermath of the pandemic.”
Quick Takes
The Wirecard saga continues. The insolvent firm’s administrator announced that over 100 potential bidders are interested in acquiring parts of Wirecard’s core business and international subsidiaries. Meanwhile, the Wall Street Journal revealed the firm’s COO disappeared as trouble mounted; and the U.S. Justice Department is now scrutinizing the company in relation to a $100M bank-fraud conspiracy.
OCC’s Brooks expects to see new fintech lending rule. Acting Comptroller of the Currency Brian Brooks said he expects the OCC to propose a new fintech-related rule on true lender doctrine to clarify when a bank or fintech firm is the actual lender on a loan. The rule would have significant implications for fintech firms, some of which avoid state interest rate limits on online lenders through bank partnerships.
Deutsche Bank teams up with Google... The German bank signed a letter of intent with Google for a multi-year strategic partnership designed to drive technological innovation and provide cloud services to the bank. The deal, which also received bids from Microsoft and Amazon, is part of Deutsche’s ~$15 billion technology investment to overhaul the bank’s outdated and fragmented technology networks.
...and pays NYDFS fine for Epstein dealings. Deutsche Bank also will pay a $150 million fine to the New York Department of Financial Services (NYDFS) for “allowing disgraced financier Jeffrey Epstein to make payments to Russian models and withdraw suspicious amounts of cash during five years as a client.” The regulator found "significant compliance failures" in the bank’s dealings with Epstein during that time.
Starling seeks government funding. The London-based challenger bank is seeking two Banking Competition Remedies (BCR) grants totalling ~£60 million to develop new offerings. The BCR was established by the British government following the RBS bailout in order to foster competition in the British banking sector. Starling was granted ~£100 million in BCR funding in 2019.
Brex rolls out two new products. The firm, which offers business credit cards and cash management accounts aimed at tech startups, rolled out two new features for its Brex Cash customers: mobile check deposits and transaction approval flows.
Railsbank enters U.S. market with its first American customer. The London-based open banking platform debuted in the U.S., partnering with its first American customer, Unifimoney, to offer a “credit card as a service” product to end-users. Railsbank North America’s new COO Dov Marmor noted that the firm will enable “innovation through the industry-first CCaaS proposition in the US.”
Pop Flies
Swap raised $3.3.M in seed funding to help improve infrastructure for financial institutions.
Wagestream raised $20M in a Series B round as income streaming continues to gain traction in the UK.
Square Cash (digitally) appeared in Nintendo’s Animal Crossing game, handing out in-game cash to users.
Crypto exchange Binance acquired digital wallet platform Swipe for an undisclosed amount.
TransferWise is preparing to close $300 million secondary share sale that would value it at $5 billion.