Fintech Update, 9/13-9/26
Hi! It’s Monday, September 27, 2021.
Dear readers, Apologies for unexpectedly missing you last week and we hope you’re buckled up for another mega-update this week! We’re also working on some new stuff internally – stay tuned for more announcements coming in the next few weeks. As always, thanks for having us in your inboxes and feel free to reach out any time!
- Joe, JC, and Kieran (Team TFU)
Leading Off
Goldman acquired BNPL provider GreenSky for $2.2B; the U.S. Treasury is considering a possible regulatory framework for stablecoins and is preparing to sanction financial exchanges who facilitate payments to ransomware hackers; and Chinese regulators banned all cryptocurrency activities in the country and took further action to break up Alipay. // In other news, the SEC likely will not take action against Robinhood’s “payment for order flow” policy, Coinbase caved to pressure from the SEC and scrapped plans to offer a crypto-lending product, Revolut is getting into stock trading in the U.S., Capital One is launching a new BNPL product, and Pagaya is going public via SPAC. // All this + more below!
Heavy Hitters
Goldman acquired GreenSky. Goldman Sachs announced that it plans to acquire fintech lender GreenSky for $2.24 billion as it pushes further into consumer finance. GreenSky offers point-of-sale installments for big ticket items like home improvement projects or elective dental or medical procedures that are repaid over weeks or months. The deal values GreenSky at *more than 50% of its closing price*. The acquisition bolsters Goldman’s consumer capabilities, adding to Marcus’ capabilities to advance the bank’s aspiration of making Marcus “the consumer banking platform of the future.” The acquisition will also bring GreenSky’s customers into the Marcus ecosystem and will give it access to GreenSky’s network of over 10,000 merchants.
Treasury pushes for stablecoin rules. . . The Treasury Department is working with other agencies on a report, expected in the next month, which will outline a possible regulatory framework for stablecoins. The report’s working group is looking at stablecoins' susceptibility to runs and is considering mandating transparency for reserves backing stablecoins.
. . . and is cracking down on crypto. The department is preparing to sanction financial exchanges that facilitate delivery of illicit digital payments to hackers, in an effort to disrupt the system supporting ransomware attacks.
Speaking of cracking down on crypto… The Chinese government expanded its crackdown on cryptocurrencies, banning “all crypto transactions and mining” in the country. The state’s ten top regulators, “including the central bank, financial, securities and foreign exchange regulators,” said that they will collaborate on identifying and eliminating all cryptocurrency activity in China, “the first time the Beijing-based regulators have joined forces to explicitly ban [such] activity.” Chinese government leaders have consistently expressed concerns about, and taken action to curb, crypto-related businesses in the country, since they exist outside of official government control and could present an alternative to China’s own, sovereign cryptocurrency, the “digital Yuan.”
And speaking of China… Chinese regulators also took its sanctions against Ant Financial to a new level after nearly a year of increasing government oversight. In the latest move, the government is seeking to break up the fintech giant by spinning off its lending arm and handing over to the government “the user data that underpins its lending decisions.” After splitting up the firm, Ant “will no longer independently be able to build or assess borrowers’ creditworthiness and will have to . . . request the information from the [government],” a move that is expected to “severely curtail” growth. The government’s latest moves mark a significant turn in fortune for Ant since last October, when it was preparing to go public on the Hong Kong and Shanghai stock exchanges in what was expected to be the largest IPO in history.
Quick Takes
The SEC is not expected to ban “payment for order flow.” According to the Robinhood legal team, the U.S. Securities and Exchange Commission (SEC) will “investigate, but not ban,” the practice, in which Robinhood is compensated by market makers for driving trade volume to them over competitors. Robinhood has argued that the practice is a “good thing for retail investors” and waved off concerns about potential misaligned incentives or lack of transparency for customers.
PayPal finally launches “super app.” After lots of hype and headlines, the first version of PayPal’s super app is officially live. The company reportedly plans to enter the investment space as well, supporting the ability for users to buy and trade stocks. The new app makes PayPal more directly competitive with neobanks like Varo and Chime and puts exchanges like Robinhood on notice.
Coinbase abandons lending product. The crypto exchange will not launch Lend, a new digital asset lending product, as expected. After announcing the product earlier in the year, Coinbase received notice from the SEC that it would be considered “an unregistered security that would have prompted them to take legal action.” In announcing its decision not to proceed with the rollout, Coinbase pointed to the SEC’s notice, stating that it continues to “seek regulatory clarity” from U.S. regulators.
Company updates
Revolut will offer stock trading. Revolut secured a U.S. broker-dealer license and is planning to roll out commission-free stock trading to U.S. customers in a few months, helping Revolut compete with digital exchanges like Robinhood and Square in the U.S.
JPMorgan launches UK digital bank. The Chase-branded digital bank debuted in the UK as part of a “very big strategic commitment” to build a sustainable retail business in Great Britain.
Nubank launches corporate credit card. The Brazilian neobanking behemoth is rolling out the Nubank PJ business credit card to a group of 50,000 corporate customers.
Square rolls out the ability to pay via Cash App to merchants. The payments firm will integrate its CashApp product more deeply into online and in-person sales, allowing users to “scan a seller’s QR code at checkout or click a button on their mobile device” to pay via the app.
Starling and Monese get into BaaS. The British challenger banks both are offering new banking-as-as-service products, allowing client firms to build white-labelled banking products on top of their platforms.
BNPL corner
Affirm rolled out its adaptive checkout product, which allows merchants to give customers more choices when it comes to their payments, providing “optimized biweekly and monthly payment options for each transaction side-by-side in a single integrated checkout solution.”
Capital One getting into BNPL. Credit card company Capital is planning to test a BNPL product later this year. The product will include point-of-sale loans for customers at a specific set of merchants with which it already has a partnership.
Curve, too. British banking platform Curve received FCA approval on its new product Flex, a BNPL service. Curve has been testing the product since September 2020.
Oh, and Monzo. British challenger bank Monzo announced that it is launching a new BNPL service that will allow eligible Monzo customers to pay for purchases over £30 in different installments at different interest rates.
Pop Flies
Pagaya, an American-Israeli artificial intelligence-based network for financial transactions, will go public via SPAC merger in a deal valuing the firm at $9 billion.
QED had money. Money begets more money. QED now has more money. QED.
The Economist dives deep on DeFi, looking at innovations like decentralized exchanges, fully transparent stablecoins, and lending protocols.
Intuit is launching a corporate venture capital arm, Intuit Ventures, to “identify growth opportunities and trends beneficial for its key customers — small businesses and consumers.”
[Biased post alert!] Check out Not Boring’s spotlight on Unit.
Selected Fundings
Wealth Management
Savings and credit building company Self raised $50 million in Series E funding.
Real estate investment tech company Mynd raised $57.3 million in funding from QED investors.
Open Mineral, the trading platform for commodities, raised $33 million in Series C funding.
Lending
TomoCredit, the company building credit cards for first-time borrowers, raised $10 million in Series A funding.
Wiserfunding, the company that assesses credit risk of SMEs, raised £3 million in new funding and signed up Revolut as a client.
Blit Rewards, the company offering rewards for property renters, raised $60 million in growth funding at a $350 million valuation.
Indian BNPL provider ZestMoney raised $50 million in a new financing round from Australia’s BNPL provider Zip.
BNPL provider for commercial insurance Ascend raised $5.5 million in seed funding.
Banking
Australian business banking provider Airwallex raised $200 million in Series E funding at a valuation of $4 billion.
British open-banking-based service provider TrueLayer raised $130 in a new funding round led by Tiger Global at a valuation of over $1 billion.
Canadian neobank Neo Financial raised $64 million in Series B funding.
Payments
SME payment solution provider SpotOn raised $300 million in a Series E round led by a16z at a valuation of $3.15 billion, almost 2x the valuation it received in May from its $125 million Series D fundraise.
Recurring billing payments platform Billogram raised $45 million in a new funding round.
Egyptian B2B e-commerce marketplace and payments provider Capiter raised $33 million in Series A funding.
Cloud native payments-as-a-service platform Form3 raised $160 million in a new funding round led by Goldman Sachs.
Pine Labs, the asian merchant commerce platform that offers merchants payments terminals, invoicing tools and working capital, raised $100 million in new funding.
Merchant open banking-based payment service provider Vyne raised $15.5 million in seed funding.
Corporate
Singapore-based fintech Spenmo, which helps businesses and their finance teams pay bills, track and categorize spend, and close their books, raised $34 million in a Series A funding round led by Insight Partners.
Infrastructure
Cross-border commerce fintech Zonos raised $69 million in Series A funding.
Identity infrastructure company Persona raised $150 million in a Series C funding round led by Founders Fund.
SaaS-based loan servicing platform Peach Finance raised $20 million in a Series A funding round led by Canapi Ventures.
Insurtech
Pay-per-mile insurtech Just Insure raised $8 million in new funding.