Fintech Update, 4/25 - 5/8
Hi! It’s Monday, May 9, 2022.
Hey, everyone! We’re happy to be back in your inbox after a week off. Buckle up for a two week mega-update! 🚀
The Rundown
The Consumer Financial Protection Bureau (CFPB) announced plans to invoke a “dormant authority” that will allow it to supervise nonbanks offering consumer financial products, while concurrently publishing a procedural rule authorizing the agency to make public its decisions about risks posed by those nonbank entities. The referenced supervisory authority was granted to the Bureau in a 2013 procedural rule that described its “nonbank risk-determination process, but it has never before used this authority to supervise a nonbank.” While the change in the Bureau’s posture on nonbank enforcement should raise eyebrows with fintech firms, the potential for public shaming presented by the CFPB’s new procedural rule is the one that should set off alarm bells: nonbank companies offering consumer financial products would not only be subjected to greater scrutiny but also public rebukes and enforcement actions like those seen by other market participants. The CFPB plans to start examining fintech firms – regardless of size – in the mortgage, student loan, and payday loan industries, as well as “larger [nonbank] participants” in other consumer financial verticals. CFPB Director Rohit Chopra described the Bureau’s decision to act on this authority as “critical agility to . . . conduct examinations of financial companies posing risks to consumers and stop harm before it spreads.”
Authentic Brands Group (ABG) sued one-stop checkout company Bolt for breach of contract, alleging that the firm’s software wasn't ready when promised. The suit poses a significant reputational risk for the startup, most recently valued at $11 billion, which “regularly touted ABG as one of its flagship customers and tech validators.”
Fidelity announced plans to give participants in employer-sponsored 401(k) retirement accounts the option to invest in Bitcoin. Later this year, Fidelity will become the first retirement plan provider to add Bitcoin as a 401(k) plan investment option, allowing investors to allocate up to a maximum of 20% of their nest eggs to Bitcoin. Employers will be required to approve crypto investments inside the plans before they provide them to the workforce.
Payments giant Stripe launched Financial Connections, a new product allowing Stripe customers to connect directly to external bank accounts in order to “access financial data . . . or run certain kinds of transactions” like account verification, balance checks, and account ownership confirmation. And if you’re saying to yourself, ‘so basically Stripe just built its own Plaid?’ – you’re not alone. Not long after the announcement, Plaid CEO Zachary Perret swiped at Stripe (in a now-deleted Tweet), saying: “you took interviews with Plaid & asked probing questions multiple times over the past few years, and your team sent repeated RFP's (under NDA!) to us asking for tons of detailed data. I wish y'all the best with these products, but surprising to see the methods.”
Truist, the sixth largest bank in the U.S., acquired 12-person prize-linked savings fintech startup for younger users Long Game for an undisclosed price.
Robinhood announced that it is laying off 9% of its full-time employees. CEO Vlad Tenev told employees that fast growth during the pandemic “led to some duplicate roles and job functions, and more layers and complexity than are optimal.”
Robinhood also announced that it is launching a new stock lending feature that will “allow its users to lend out their stocks in hopes of earning passive, recurring income from borrowers.”
Klarna announced that it will report British users’ payment performance to credit bureaus TransUnion and Experian starting on June 1. Customers’ credit scores are expected to be impacted by data on whether they repay BNPL loans in a timely manner within the next 12 to 18 months. The move comes as British regulators work on BNPL regulations that will likely be implemented in 2023.
OpenSea acquired NFT marketplace aggregator Gem for an undisclosed price. In a company blog post about the acquisition, CEO Devin Finzer said the acquisition will accelerate Gem’s “product vision and roadmap” and give OpenSea greater “intuition about the advanced NFT community.”
Goldman Sachs offered its first bitcoin-backed loan.
Hackers stole $77 million in crypto from recently merged DeFi organizations Fei Protocol and Rari Capital.
Selected fundings
Card rewards platform Kard raised $23 million in a Series A funding round led by Tiger.
Payments infrastructure startup Minka raised $24 million in a new funding round co-led by Tiger.
Copper, a digital bank for teens that has grown to over 800,000 users since launching last year, raised $29 million in Series A funding.
British challenger bank Starling raised £130.5 million in internal fundraising at a £2.5 billion pre-money valuation.
Berlin-based tax filing app Taxfix raised $220 million in Series D funding at a valuation of over $1 billion. 🦄
Lifestyle-focused neobank Cogni raised $23 million in Series A funding and pivoted to “a new mandate — bringing web2 and web3 services together on one platform.”
Concerto, the startup working to bring co-branded credit card programs to more brands, raised $21.2 million in new funding.
Chilean SME financial services provider Xepelin raised $111 million in Series B funding.
Indian neobank Open raised ~$50 million in Series D funding at a valuation of over $1 billion. 🦄
BNPL for healthcare provider Walnut raised $110 million in Series A funding comprising $10 million of equity financing and $100 million in debt financing.