Fintech Update, 2/21 - 2/27
Hi! It’s Monday, February 28, 2022.
The Rundown
First, we’d like to lend our voices to the loud cries we’ve heard all week expressing outrage and horror at the actions of Vladimir Putin, and to share our support for the embattled people of Ukraine. We’re reminded during times like this of the fragility of peace and our global systems and the importance of standing up in the face of tyranny.
To that end… SWIFT. While the world watched helplessly as Russia’s military encircled Ukraine, numerous world leaders were working on how to slow their advance through economic and financial sanctions. As the situation progressed, so did their thinking on the “toughest possible sanctions”: blocking Russian banks from SWIFT. As a quick reminder, the SWIFT system (Society for Worldwide Interbank Financial Transactions) is a global financial messaging system that allows tens of thousands of banks to send funds to counterparties around the globe. Cutting off access to SWIFT would make it much more difficult for Russian banks to access and transact cash, forcing Russia’s government to rely on its so-called “financial fortress” for funds. The plan came with the drawback that it would also make it more difficult for other countries to pay or be paid by Russian banks with which they may have had preexisting deals – a concern that initially prevented Italy, Hungary, and Germany from supporting the measure. However, following growing calls to act and further incursions by Russian forces, the EU and US have agreed to block certain Russian banks from the SWIFT system, an action that Reuters expects to be “devastating for the Russian economy and markets.” There is some concern that being cut off from SWIFT may drive Russia into the arms of alternative and less savory sources of liquidity, such as disreputable banks, sanctioned countries, or cryptocurrency; but for now, the world has taken a significant step to curb Russia’s easy access to funds, hopefully upping the internal, popular pressure on Putin to halt his invasion.
In other Ukraine-related fintech news…
Axios offered a rundown of how the invasion of Ukraine will affect fintech companies, and what they are doing to support the country’s people during this time.
Wise restricted transfers to Russia following its invasion of Ukraine, and had to cap transfers to Ukraine to maintain its ability to service the country.
And in our regularly scheduled programming…
Citi joined the growing list of US banks that have eliminated or plan to eliminate overdraft fees, announcing that it will “get rid of overdraft fees, non-sufficient funds fees and overdraft protection” by the summer. Citi will be the largest bank yet to do away with overdraft charges.
Chime is delaying its IPO amid a roughly 40% drop in publicly traded fintech stocks since October 2021, providing even more evidence of a cooling IPO market for fintech.
2022 fintech funding is already on track to beat last year’s all-time high, with $18.2 billion announced in the first six weeks of the year (you can read Citi Global Insights’s report here).
Finally, there was a *ton* of M&A activity this past week…
SoFi announced that it has agreed to acquire banking-software provider Technisys for $1.1. billion in an all stock deal. After acquiring payments platform Galileo for its issuer processor capabilities and Golden Pacific for its bank charter, SoFi appears to be buying the infrastructure required to become a full stack Banking-as-a-Service provider. The acquisitions should serve to augment SoFi’s internal capabilities to support its consumer brand and potentially offer SoFi the chance to distribute its platform to enterprises.
Credit bureau TransUnion agreed to acquire the financial services unit of Verisk, which offers consumer portfolio performance insights based on lender-contributed data, for $515 million.
Identity verification company SentiLink acquired alternative finance data company Upstream Logicx for an undisclosed price, about 6 months after raising $70 million in Series B in August.
The London Stock Exchange agreed to buy Tora, the cloud-based front-to-back office technology provider for the buy-side, for $325 million to add digital assets to its trading tools.
Cryptocurrency exchange Bitpanda acquired U.K.-based digital asset custodian Trustology for an undisclosed sum.
Selected fundings
Embedded finance provider Weavr raised $40 million in a Series A funding round led by Tiger to fuel its global expansion, including plans to roll out in the U.S.
Italian BNPL Scalapay raised $497 million in Series B funding at a valuation of over $1 billion. ‘Eeey, thatsa spicy unicorn 🤌🦄
Express checkout company Skipify announced a strategic investment round from PayPal Ventures, Synchrony, Amex Ventures and Okta Ventures.
Promise, a payment processing platform built for utilities and government agencies, raised $25 million in Series B funding.
Indian neobank Niya raised $100 million in a Series C funding round.
Pakistani messaging and payment app NayaPay raised $13 million in seed funding.