Fintech Update, 1/4 - 1/10
Hi! It’s Monday January 11, 2021.
Leading Off
BBVA announced that it will shutter challenger bank pioneer Simple, transitioning all Simple accounts over to BBVA USA ahead of its merger with PNC. // The OCC issued an interpretive letter affirming the ability of regulated banks to participate in blockchain networks and use stablecoins as a means of exchange and settlement. // In other news, Jack Dorsey penned a letter to FinCEN challenging its recent proposed rule on KYC requirements; PayPal won its prepaid card suit against the CFPB; SoFi is going public via SPAC; and Green Dot launched a challenger bank. // All this + more below!
Heavy Hitters
Simple is shutting down. BBVA announced that it will shut down the “the pioneering mobile and online banking app that it acquired for $117 million in 2014,” in a move that took many users and industry watchers by surprise. Following its debut in 2009, Simple became one of the first, successful, digital-focused banking services firms in the world, amassing 100,000 users by the time Spanish banking giant BBVA acquired it in 2014. As noted in the TechCrunch article that simultaneously broke the news and eulogized the firm, Simple was a startup “ahead of its time”; many of the world’s successful challenger banks, including “Nubank, Chime, Current, N26, Revolut, [and] Monzo” borrowed business model and technical innovations from Simple, “turning what seemed like a radical concept into one that is now fairly commonplace.” BBVA announced that all Simple accounts will be transferred to BBVA USA, in an effort to streamline operations as part of its upcoming merger with PNC. So pour one out for Simple, a firm that helped create the future we now enjoy.
OCC letter bolsters legitimacy of blockchain and stablecoins for banking. The Office of the Comptroller of the Currency (OCC) published an interpretive letter confirming the ability of national banks to participate in blockchain networks and “use stablecoins to conduct payment activities and other bank-permissible functions.” The letter is a significant one for the blockchain and cryptocurrency sectors: it places DLT-based networks in the same regulatory category as other, more well established payments networks such as SWIFT and ACH; and it affirms that stablecoins are a legitimate means of payment and settlement for regulated institutions. The letter is just the latest in a flurry of crypto-friendly moves made by Acting Comptroller Brian Brooks, who is expected to leave the OCC with the advent of the Biden Administration.
Quick Takes
Dorsey questions proposed crypto rules. In a letter [full text] to the Financial Crimes Enforcement Network (FinCEN), Square CEO Jack Dorsey joined Coinbase, A16z, and other companies in arguing that the agency’s proposed rules, which would require exchanges to comply with know-your-customer requirements, may push users into unregulated services outside of the US.
PayPal wins prepaid card lawsuit against CFPB. The payments giant won its lawsuit against the Consumer Financial Protection Bureau (CFPB) contesting the Bureau’s 2019 rule regulating prepaid cards and digital wallets. The lawsuit questioned the agency’s authority to block users from linking new credit card accounts to PayPal and required that prepaid card providers disclose fees in a specific form.
SoFi is going public via SPAC. The lender announced it will take itself public via a merger with a special purpose acquisition company (SPAC) created by investor Chamath Palihapitiya, a deal valuing the firm at $8.65 billion. Palihapitiy, who “has been credited for kicking off the SPAC craze,” previously used a shell company to take a 49% stake in Virgin Galactic.
Green Dot launches its own challenger bank. The prepaid card issuer and provider of banking services to companies like Apple and Uber launched Go2bank, a new banking app that offers mobile app-based checking and savings accounts to financially insecure Americans.
Stripe stops processing Trump campaign payments. Following Wednesday’s insurrection in Washington DC, the payments giant will no longer process transactions for the Trump campaign, which had continued to fundraise after the election. Stripe is the first tech company to clamp down on Trump’s money flows following the Capitol siege.
Affirm files new financials following canceled IPO. After delaying its plans to go public in December, the buy-now-pay-later firm issued a revised S-1 filing, updating its reported financial results and detailing “what could be its first IPO price interval . . . between $33 and $38 per share.” Such pricing would value Affirm at between $8.1 - $9.4 billion, though the company has not confirmed any new plans for an IPO.
Venmo launches Cash a Check. The P2P payments firm introduced a new feature to allow certain customers to cash checks straight from the app. Although Venmo plans to charge fees for this feature, the firm currently is waiving fees for stimulus checks.
Gojek discusses major regional payments merger. The Indonesian ride-hailing and payments giant reportedly is close to a deal to merge with local e-commerce firm PT Tokopedia. The combined company would include a range of services akin to a combination of Uber, PayPal, and Amazon, creating an “Indonesian powerhouse with a valuation of about $18 billion.” Gojek also plans to IPO in 2021.
Equifax to acquire AI fraud prevention firm. The global background check and data analysis company “signed a definitive agreement to acquire Kount,” the firm behind a suite of artificial intelligence-based “fraud prevention and digital identity solutions.” The deal is valued at $640 million.
Pop Flies
Forbes released its inaugural Fintech Awards. Honorees included Chime, HMBradley, Affirm, Propel, and Jack Dorsey, who was named “Fintech person of the year.”
Orange Bank acquired Anytime to better serve the professionals and small business market.
Fundings!
Digital banking platform Oxygen raised $17 million in Series A funding.
Bangalore-based CRED, which rewards customers for paying their credit card bill on time, raised $81 million in Series C funding at an $806 million valuation.
Corporate spend management startup Divvy raised $165 million in Series D funding.
Paris-based core banking platform TagPay raised €25M.
SaaS banking platform Mambu raised €110 million in new capital.
French accounting SaaS provider Pennylane raised $18.4 million in new funding.
Cryptocurrency tax automation software provider TaxBit secured a new round of funding from PayPal Ventures, Coinbase Ventures, and Winkelvoss Capital.
SaaS payroll and human capital management software provider Paycor raised $270 million in new investment.
Homeownership platform developer SimpleNexus raised $108 million in a Series B funding round led by Insight Partners.