Fintech Update, 2/26 - 3/3

Mar 04, 2024

Hi! It’s Monday, March 4th, 2024

Klarna announced that its OpenAI-powered virtual assistant “has had 2.3 million conversations, two-thirds of Klarna’s customer service chats . . . is doing the equivalent work of 700 full-time agents . . . and is estimated to drive a $40 million USD in profit improvement to Klarna in 2024.” It is very interesting to see AI in the wild, especially such a successful deployment - we expect to see lots more like this from fintechs and likely even banks in the short to medium term.

Stripe issued a $1 billion tender offer to investors and current and former Stripe employees at a valuation of $65 billion. Though most funds for the tender offer are being provided by investors, Stripe also noted that it is using some of its own capital to repurchase employee shares issued through equity compensation programs. The valuation represents a 30% increase from its March 2023 Series I funding (at a valuation of $50 billion) but remains well short of its peak $95 billion valuation in March 2021.

Embedded finance platform Treasury Prime will lay off a significant part of its staff as part of a strategic refocus to selling exclusively to banks. “For years, we’ve been saying that the future of banking is embedded,” said CEO Chris Dean, “[but] it’s become increasingly clear to me that the future of embedded banking is through bank-direct, fintech partnerships.” The number of Treasury Prime employees let go was not confirmed, but some reports place it around half of the company’s 100 team members.

Microsoft announced that it is releasing a Copilot chatbot that will be able to perform actions for people working in Finance and using Excel and Outlook. The tech giant said that its own finance department tested the tool and “has seen time savings.” The product “will initially run a variance analysis, reconcile data in Excel and speed up the collections process in Outlook.”

Apple will begin sharing data and payment history related to its buy-now-pay-later product to credit bureau Experian, the first BNPL provider to do so. Experian does not plan to include Apple BNPL loans in customer credit scores for now, but “will list Apple Pay Later loans initiated Wednesday onward on its credit reports.”

Mastercard plans to launch a digital account opening experience in the second half of 2024 that “will provide a set of open banking products as a core benefit” to certain debit and prepaid customers in the U.S., and will improve the user experience when opening digital accounts.

Fintech partner bank Cross River created an investment banking team that will advise clients on “their most critical decisions, including mergers & acquisitions, capital markets transactions and other corporate finance matters,” which the company bills as a “doubling down on its commitment to serving the fintech community.” The new team will sit within the bank’s Cross River Securities sister company under the same holding company.

Homerism alert! Our esteemed colleague Kieran Pasco went semi-viral this week for his response to a post from Fintech Business Weekly that mischaracterized the nature of embedded finance company Unit’s operating model and bank relationships. (Disclosure: Kieran and Joe both work for Unit). Just call him Karma Pasco from now on.

Spanish treasury management company Embat raised $16 million in Series A funding.
MENA-focused payments orchestration platform MoneyHash raised $4.5 million in seed funding.
Nigerian debt collection startup Bfree raised $3 million in seed funding.