Fintech Update, 8/8 - 8/14
Hi! It’s Monday, August 15, 2022.
The Rundown
Another week, another story about the Consumer Financial Protection Bureau (CFPB) getting all up in fintech’s business. This time, its target is Hello Digit, the financial savings tool acquired last December by Oportun. The Bureau levied a $2.7 million fine against the company for using a “faulty algorithm” that generated “overdrafts and overdraft penalties for customers” despite explicitly telling them that overdrafts were not possible on the platform. “Hello Digit . . . falsely guaranteed no overdrafts with its product, broke its promises to make amends on its mistakes, and pocketed a portion of the interest that should have gone to consumers,” the CFPB said in its press release..
Bank core system provider Jack Henry entered an agreement to acquire consumer and commercial digital payment solution provider Payrailz for an undisclosed price. Payrailz “provides cloud-native, API-first, AI-enabled consumer and commercial digital payment solutions,” which Jack Henry expects will support its “payments-as-a-service (PaaS) strategy . . . and the ability to enable embedded finance and embedded fintech.”
RenBridge – a firm used to send digital assets across blockchains without a centralized service that traces transactions – came under scrutiny after crypto analytics firm Elliptic found that criminals have used it to launder over $540 million. Bridges are largely ungoverned and often vulnerable to bad actors, with over $1.3 billion stolen so far in 2022.
Three years after launching, British challenger bank Dozens is shutting down services to its 60,000 customers, blaming Covid-related slowness and changed market dynamics for its demise. "Covid hit [and] . . . Overnight we lost both investment and B2B deals worth millions of pounds,” the company said in its announcement.
Blockchain-based payments network Ripple made a request in bankruptcy court related to crypto lender Celsius, saying it was “[interested] in learning about Celsius and its assets, and whether any could be relevant to our business.” The request pushed the mercury up on suggestions that Ripple may be considering an acquisition of the beleaguered company.
India’s central bank published new guidelines for digital lending firms intended to provide customers with greater transparency and control.
The stock price of payments processor Marqeta plummeted 24% overnight following CEO Jason Gardner’s decision to step down, paired with COO Vidya Peters’ concurrent departure.
Speaking of stock declines, Coinbase’s took a hit after the company reported a loss of over $1 billion in Q2 and a 64% decline in quarterly revenue (to $808.3 million) compared to last year.
Vista Equity Partners will acquire automated tax compliance software provider Avalara for $8.4 billion in an all-cash deal, paying a 27% premium over Avalara’s closing price as of July 6.
Finally – Mark Cuban, a man who once invested in this, said buying land in the metaverse is “the dumbest sh*t ever.” But we’ll see how he feels once Mr. Wonderful gets in on the action.
Selected fundings
Finix, a fintech that gives businesses software to process their own payments, raised $30 million in new funding.
Non-dilutive financing provider for businesses Founderpath raised $145 million in debt and equity financing.
Wealth tech company Farther raised $15 million in a Series A funding round led by Bessemer Venture Partners.
Nigerian business payment and banking solution provider TeamApt raised over $50 million in a new funding round led by QED.
Income and employment verification provider TrueWork raised $50 million in Series C funding
Forage, a fintech that provides software that helps grocers accept online SNAP payments, raised $22 million in a Series A funding round led by NYCA.