Fintech Update, 7/12 - 7/18
Hi! It’s Monday, July 19, 2021.
Leading Off
Apple is working with Goldman Sachs on “Apply Pay Later,” a new service that will let consumers pay for any Apple Pay purchase in installments over time. President Biden issued a set of executive orders, one of which encouraged the CFPB to issue rules allowing customers to download their banking data and take it with them. // In other news, Revolut raised $800 million in new funding at a staggering $33 billion valuation, Vanguard acquired investment management and personalization software provider Just Invest, Square announced its plans to launch a business dedicated to decentralized financial (DeFi) services using bitcoin, and Discover invested $30 million in Sezzle as part of a broader strategic partnership. // All this + more below!
Heavy Hitters
Apple expands its BNPL options. The tech giant will launch “Apple Pay Later,” a new service allowing users to pay for any purchase in installments via any credit card linked through their Apple Pay mobile wallet – leveraging existing bank partner Goldman Sachs to finance the necessary short-term loans. The announcement is a significant expansion of Apple’s buy-now-pay-later services (Apple already allows users to pay in monthly installments of its own products if paying with Apple Card), since customers can now take advantage of “four interest-free payments made every two weeks” or repayments “across several months with interest” on any transaction made through Apple Pay. The new functionality places Apple Pay more firmly in competition with existing BNPL players like Klarna, AfterPay, and Affirm (shares of which dropped 15% on the Apple announcement), but may be less a targeted attack than another signal of Apple’s growing ambitions in the consumer finance space: Forbes contributor Ron Shevlin notes that Apple likely sees BNPL as a feature, not a product itself (a puzzle piece in its play for “long-term adoption of Apple Pay and Apple Card”) and Goldman Sachs CFO Stephen Scherr commented that he sees “more opportunities to be had with Apple.” Our take? It’s buzzy, and it may pull some market share away from the Klarnas and Affirms of the world, but Apple Pay Later is only further confirmation of what we already know: BigTech wants to be a big part of your financial life, and no service is safe.
White House encourages CFPB to take action on data portability. We’re coming late to this party, but two weeks ago President Biden issued a set of Executive Orders intended to spur greater competition in the U.S. economy, which included an order “encourag[ing] the Consumer Financial Protection Bureau (CFPB) to issue rules allowing customers to download their banking data and take it with them.” The order refers to the portability of consumer financial data, which contributes to a strong culture of personal data ownership (Who should control your financial data? You, or your bank?). In the UK, for example, the government’s Open Banking Initiative requires businesses to open their APIs to allow third-party access to their systems, ensuring that consumers can choose to share their financial data with other service providers “securely – and only with consent.” The U.S. version of open banking is Section 1033 of the Dodd-Frank Act, which the CFPB oversees and is currently reviewing, potentially part of its rulemaking agenda for 2021. President Biden’s order may serve to accelerate that effort. Data portability and open banking is critical for a healthy financial ecosystem because it enables consumer choice and control (imagine if you tried to connect your bank account to your Robinhood account, and your bank said ‘no’?), allowing innovative fintech firms to grow, disrupt incumbents, and improve the financial lives of millions of consumers. We hope the Biden administration will continue pushing hard on this important effort.
Quick Takes
Vanguard acquires Just Invest. The investment giant purchased Just Invest, which offers tools to help investors and advisers personalize portfolios for their clients, for an undisclosed amount. Using Just Invest’s tools, Vanguard will be to “for example, quickly screen out oil polluters, take bigger positions in gun makers or automate the task of optimizing after-tax returns.” It was Vanguard’s first acquisition ever.
Revolut raises $800M at $33B valuation. The London-based challenger bank raised $800 million in Series E funding, co-led by Softbank and Tiger Global, at a valuation of $33 billion, making it the UK’s most valuable fintech and one of the most valuable fintech firms in the world. Revolut has seen profits steadily tick up since last year, with increasing margins, generating heightened investor interest: Revolut’s value has grown 6x since last July, when it was valued at $5.5 billion.
Facebook Pay extends to third party merchants. The social media giant will allow online merchants to add payment services to their sites via Facebook Pay, extending the reach of Facebook’s homegrown payments solution beyond its own platform (Facebook Pay already works across the Facebook ecosystem – Messenger, Instagram and WhatsApp). Shopify is expected to be the first third-party merchant to use Facebook Pay on its site.
Square to build DeFi business. CEO Jack Dorsey announced in a tweet that the payments firm will launch a business dedicated to decentralized financial (DeFi) services using bitcoin. Dorsey said the business will be “focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services.”
Discover invests $30M in Sezzle. The bank invested in the BNPL provider as part of a larger strategic partnership that will integrate Sezzle into Discover’s global banking and cards network and implement a referral program to offer Discover products to Sezzle’s users.
Pop Flies
The European Central Bank launched the investigation phase of its digital euro project as it continues to consider creating a Eurozone central bank digital currency.
American Express launched “My Financial Plan,” a pilot of a digital financial planning tool, in partnership with financial planning software provider BodesWell.
QuickBooks launched QuickBooks Card Reader, a mobile card reader and payment device that links directly to its accounting software.
Digital lender Blend IPO’d at nearly $20 per share, raising $360 million on its first day of trading at a $4 billion valuation.
Corporate card provider Ramp announced a new merchant blocking feature that will give its customers the option to approve or block merchants on the cards they offer to their employees.
More Fundings!
Wealth management
M1 Finance, the robo-advisor turned finance super app, raised $150 million in a Series E funding round led by SoftBank’s Vision Fund 2, only 4 months after announcing their $75 million Series D fundraise.
Banking
Banking service provider for startups Mercury, raised over $100 million in a Series B funding round led by Coatue at a valuation of $1.6 billion.
UK business banking platform Tideraised $100 million in Series C funding.
Payments
Card issuing platform Cardless raised $40 million in Series B funding.
Corporate
Equity management platform Carta is finalizing a new round of funding, expected to be $500 million to $600 million, that will value the startup at $7.4 billion.
Infrastructure
Banking as a service platform Railsbank raised $70 million in new equity funding.
Authentication platform Stytch raised $30 million in Series A funding.
Embedded fintech startup Weavr raised £7 million in seed funding.