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Future of FinTech | Edition #6 – February 2022
Welcome back to another edition of the Future of Fintech Newsletter! If you're new and curious, read on to find out what happened in FinTech across six dynamic themes and join 477 other fintech nerds in receiving some fresh Weekly FinTech Brew delivered right to your inbox every Tuesday ☕️
With edition #6, we had a lot of buzzing M&A and partnership activity going on last week.
Here's the TL;DR:
Digital and Crypto+DeFi went head to head as the most active themes this week.
Consolidation was a recurring activity – Finserv acquired Finxact, Tulioo acquired HelloFlow, Pine Labs acquired Qfix.
Partnerships made the FinTech world go round with some notable ones like
Stripe + Spotify for podcast subscriptions,
Stripe + Apple for contactless payments,
Tink + Youtility for money management,
Crypto.com and Worldpay for expansion plans, and
ClearBank + WealthKernel for deposits innovation.
Innovation was also at the forefront with new launches such as Enfuce's sustainable cards, Amex's digital consumer checking accounts, and LINE's crypto payments for merchants.
Some company-specific big moves –TransUnion became the UK's first credit reference agency to accept BNPL data for credit assessment, while Revolut secured an Australian credit license and made its roots stronger in India with investment for operations development and acquisition of a forex services provider.
Blockbuster funding rounds of the week included – Polygon ($450M), GoCardless (312M Series G), Aleo ($200M Series B), Tonik ($131M Series B), Alma ($130M), Vivid Money (114M Series C)
For the longer read, let's get going –
The Open Finance segment opened its arms to a plethora of partnerships the past week.
While Newt signed an Open Banking service agreement with open finance API platform Belvo to offer its lending-as-a-service (LaaS) offering across North America, loyalty platform Network B plugged into Nordigen’s free platform to include Open Banking connections for users as an alternative to card linking. Tink also signed Youtility as their strategic partner to assist banks with their customer interactions to promote saving actions and sustainable choices on household costs.
Amongst others are popular BNPL provider Klarna’s expansion of partnership with GoCardless to integrate A2A solutions; Zimpler’s new partnership with all-encompassing travel platform Vitec Travelize to enable consumers to pay directly; and digital wealth platform Tillit’s incorporation of TrueLayer’s payments into its service to provide customers with an improved experience of putting money into their portfolios.
With financial apps recently proliferating across Southeast Asia, Indonesian startup Brick secured $8.5M in seed funding to continue bridging financial institutions, businesses, and customers. Jack Henry is also set to revamp its digital banking strategy for its core business in a move to provide local and regional banking clients with a FinTech-enabled open banking ecosystem.
An assorted mix of fundings, partnerships, and acquisitions surrounded the buzz for the Digital Finance vertical.
On the fundings front, Sardine—the fraud and compliance platform for FinTechs—announced $19.5M in Series A funding from Andreessen Horowitz, NYCA, and Experian Ventures to enable companies to protect customers from financial fraud. Global payment, liquidity, and treasury management platform Vitesse PSP secured $26M in Series B funding to incorporate more digitized ways of working in the insurance market.
Startups from emerging markets are also treading the digitization path in a bid to obtain financial inclusion and further their respective economies. YC-backed Duplo is one such startup that recently raised $1.3M pre-seed to build a financial OS for Africa’s B2B e-commerce and retail space. Philippine’s Tonik similarly closed a $131M round of Series B equity funding to accelerate growth of its digital bank in the country.
In other news – WealthKernel launched Instant Matching Deposits powered by cloud-based clearing bank ClearBank to allow investors to instantly fund their accounts and begin trading without waiting days for payments to clear; and FinTech software platform Sila integrated TrueAccord’s intelligent, digital-first collection and recovery solutions.
Global expansion and digital strategy boost amongst digital players seem to be on the rise as of late. UK’s Revolut is accelerating its plans to offer its remittance service and forex services to the Indian market by acquiring international money transfer company Arvog Forex. The global FinTech was also granted an Australian Credit License by the ASIC to offer credit products to the Australian market.
While on one hand, Trulioo acquired no-code KYC and client onboarding platform HelloFlow for its European expansion, Fiserv on the other struck a deal to acquire cloud-based Finxact for $650M to boost its digital offerings. The Etisalat Group in alliance with Abu Dhabi’s ADQ, Abu Dhabi Holding, and First Abu Dhabi Bank made the news for their plans to launch a new digital bank by the name of Wio in UAE. However, despite witnessing such successes, there have been a few within the field who are shutting their doors – neobank Masthaven is one such entity that is withdrawing from the UK banking market just six years after winning its banking license.
Bringing innovative products and services to consumers at a one-stop marketplace is at the forefront for the Embedded Finance section lately.
FintechOS is on a continued mission to do just so, as they launch their latest FintechOS 22.w High Productivity FinTech Infrastructure that offers SME lending, pet insurance, BNPL services and much more. Q2 is enhancing its lineup with the Helix embedded-finance solution whose personalization can scale larger user bases. Even TransUnion announced that it is ready to accept BNPL finance into UK consumer credit files, being the first UK credit reference agency to do so.
BNPL firm Zip stole not one, but two headlines with its partnerships in the space last week – having joined forces with technology marketplace Swappa as well as Singapore’s Singtel to provide short-term financing options. Spotify’s collaboration with Stripe to help podcasters monetize their content via Podcast Subscriptions also made its mark as a move to accelerate the creator economy.
Not only that but BNPL players Klarna and Alma also made it to the bulletin for their respective funding rounds – with BNPL behemoth Klarna eyeing a fresh funding opportunity that could see its price tag reach $60B, and French BNPL provider Alma closing a $130M Series C round to expand to more European markets.
As the DeFi industry continues to garner more attention by the day, many are placing their bets on the emerging potentialities of the sphere.
In the race to invest in web3, Sequoia led a $450M investment in Polygon, a blockchain network that serves as a support layer for Ethereum. Privacy-focused blockchain project Aleo raised $200M in Series B funding, a move that puts the notion of zero-knowledge-proof technology in the limelight. Cross-chain DeFi investment ecosystem Aperture also raised $5.3M in seed and strategic round sale to strengthen more cross-chain yield strategies through single interface marketplaces. To make virtual assets more accessible in Southeast Asia, Philippine Digital Asset Exchange (PDAX) has raised more than $50M in funding, enabling payments in and out of metaverse applications.
Many platforms are also gearing up to make significant launches and expansions into the decentralized market –
Japan’s LINE messenger began trialing its LINK (LN) native token to expand users’ payment options;
QR Assets went live with QDFI11 DeFi exchange-traded fund on the Brazilian Stock Exchange;
Luntivo DEX announced its limited-time coin offering to enable more people to participate on its platform;
Crypto payments platform Wirex launched its services in the US for affordable, secure, and easy access to crypto;
similar to Latin American exchange Bitso’s formal launch in Colombia to benefit the state’s financial ecosystem as well as educate the citizens.
Additionally, banking consortium Fnality became a step closer to launch after two major European banks, NatWest and Santander, successfully conducted a proof of concept showcasing the benefits of distributed ledger technology (DLT). Crypto.com was also in the news for its partnership with industry-leading blockchain validator Worldpay from FIS.
The SuperApp phenomenon is growing across sectors – with housing giant Zillow surprising the real estate world by revealing a new “housing super app” strategy. Uber’s Mideast business Careem is looking to hire more than 200 people in its own quest for the roll-out of its super app. Airtel’s Xstream streaming super app was also in the spotlight as a new streaming service that will provide access to 15 over-the-top video streaming apps.
Vivid Money, a challenger bank out of Berlin, raised $114M in Series C round to create a super app that lets users access products that intersect the worlds of DeFi and TradFi. Latin American super app Hugo and Ditto’s partnership for enabling businesses in remote or hard-to-connect environments to continue normal operations uninterrupted made for an innovative move for the trend.
Revolut was on fire for the week, having bagged another headline for its plans to expand and hire in India as it sees itself competing as a financial super app. The Indian market doesn’t seem to stop just there, though, as FinTech unicorn Pine Labs makes its acquisition of online payments business Qfix Infocomm, as the former prepares to list on the New York Stock Exchange.
Furthermore, American Express launched its first all-digital consumer checkout account, marking the shift of traditional banks adopting more digital strategies and offering more competitive banking services. From the emerging markets sphere, Malaysian FinTech IIMMPACT announced $2M in seed funding to expand on its offering of turnkey payment solutions for businesses.
As more and more financial institutions become mindful of climate change, many are starting to realign their policies and strategies to be in line with the net-zero ambitions that are aimed to be met by 2050.
While Enfuce introduced its MyCard product that enables European FinTechs to launch their own cost-effective payment card to cut down on plastic waste, NatWest made the headlines for not one, but two new green offerings – green loans and green asset finance propositions for qualifying SMEs; and an online Climate Hub that will provide them with the information on how to apply for the same; so as to further their sustainability ambitions. Aviva’s renewable energy insurance business has also witnessed rapid growth following its decision to stop insuring firms directly involved in operational fossil fuel power generation.
Regulation becomes a crucial aspect in this ongoing venture of following the ESG norms. The Securities and Exchange Board of India (SEBI) released a consultation paper to suggest standards for ESG Rating Providers. The European Securities and Markets Authority (ESMA) also published its Sustainability Finance Roadmap 2022-2024 that prioritizes greenwashing and promotion of transparency.
With industries realizing the potential of green finance, many are also making strategic moves to expand into the green industry. Temasek made the news both for its decarbonization investment partnership with BlackRock, and for investing in Swiss climate specialist South Pole.
HELPFUL and Mastercard joined hands (or should we say green thumbs) to reward users for returning single-use plastic bottles via the Scottish Deposit Return Scheme pilot. Even developing markets are increasingly taking interest in going green, with The Institute of Banking and Finance Singapore (IBF) and the Monetary Authority of Singapore (MAS) setting out 12 technical skills and competencies needed for individuals to perform various roles in sustainable finance; and Australia’s big four banks doubling down on investment in digital receipt startup Slyp to promote more sustainable proofs of purchase.
And that's a wrap 👋
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