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Top 10 Fintech News Stories for the Week Ending June 12, 2021

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This week was all about new funding rounds and fintechs hitting the public markets as the flood of money into fintech continues unabated. Here are what I consider to be the top 10 most important fintech news stories of the past week.

Marqeta stock jumps out of the IPO gate, finishes with valuation just over $16 billion from MarketWatch – Marqeta went public on Wednesday, pricing at $27, above the $20-$24 range, and closed the day with a solid bump to $30.52. It ended the week up even higher at $31.50.

Fintech giant Klarna raises $639M at a $45.6B valuation amid ‘massive momentum’ in the US from TechCrunch – The BNPL sector shows no signs of slowing down as Klarna closes another mega-round with a valuation up 47% from just three months ago.

Fintech all-star Nubank raises a $750M mega round from TechCrunch – To win the largest fintech round of the week competition you needed to raise $750m which is what Brazilian digital bank Nubank did.

SoftBank, Viking Invest $250 Million in Latam Fintech Unicorn from Bloomberg – Another Latin American fintech has raised a big round with Clip, the “Square of Mexico”, closing on $250 million at a $2 billion valuation.

Mark Cuban-backed banking app Dave to go public in $4 bln SPAC merger from Reuters – Don’t forget about SPACs. Digital neobank Dave is merging with a Victory Park SPAC valuing the company at $4 billion.

Basel suggests strictest risk weighting for crypto from Banking Dive – The Basel Committee on Banking Supervision recommended that a 1,250% risk weight, the highest risk rating, be applied to a bank’s exposure to bitcoin.

It’s Time To End Overdraft Fees (And Chase Bank Is Just The Bank To Do It) from Forbes – Ron Shevlin took on overdraft fees this week calling on Chase to end the practice. Until the big money center banks eradicate the practice, he argues, overdrafts are here to stay.

Robinhood Markets Is Said to Now Target July for IPO from Bloomberg – After initially saying it would go out in late June Robinhood is now saying it will push their public markets debut to after July 4.

Remitly files initial IPO paperwork as Seattle fintech company prepares to go public from Geekwire – Mobile remittance company, Remitly, has filed confidentially with the SEC to go public at a reported $5 billion valuation.

Walmart partners with PayNearMe, Green Dot to launch faster cash bill-pay in August from Banking Dive – Walmart customers will soon to be able to pay their bills in cash at its stores with a simple scan of a biller code.

Dear Policymakers: Three things you can do to help American small businesses after the Paycheck Protection Program

Following the Paycheck Protection Program, policymakers should consider three changes that modernize public and private small business lending programs by expanding capital access, reducing inefficiencies and reaching underserved communities.

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[Editor’s note: This is a guest post from Ryan Metcalf, Head of Public Policy & Social Impact at Funding Circle.] 

The Paycheck Protection Program (PPP), with the help of fintech lenders such as Funding Circle, successfully provided U.S. small businesses experiencing extraordinary financial challenges during the COVID-19 pandemic with nearly $800 billion in critical funds. The positive impact of the program on Main Street was undoubtedly significant, helping business owners keep their doors open and their employees on payroll. Additionally, the American Rescue Plan Act allotted $10 billion to fund the State Small Business Credit Initiative (SSBCI) over the next nine years, dedicating more money to continue to help small businesses recover and grow.

Following the PPP, the government should consider three key changes that will ensure the billions of taxpayer dollars invested in these programs effectively reach small businesses, including those in underserved communities nationwide, and are protected from fraudulent abuse.

Change #1: Adopt Application Programming Interface (API) technology

In 2019, Congress passed the Taxpayers First Act requiring the Internal Revenue Service (IRS) to develop an automated system to receive third-party income verification forms (4506-T, now 4506-C). This system is intended to replace the current system, which relies on semi-secure fax. The 4506-C form allows taxpayers to give their permission to the IRS to send a summarized transcript of their tax returns to an authorized third party (i.e., SBA or lender). The IRS has already been accepting e-signatures since 2011 and is able to send 4506-C tax data to third parties online, although in an extremely limited capacity.

What is needed is the execution of the Taxpayers First Act and adoption of the API technology, which are programs that instantly transfer data. Adoption of the API would allow the IRS to send data to lenders, with taxpayer permission, instantly and securely, rather than waiting days or weeks for paper processing. Lenders use that data to verify the authenticity of tax returns and financial information. If the standard delay, spanning from two to eight days, was replaced by instant processing, tax data could also be used for instant validation of the true identity of the applicant for verified credit decisions. This would vastly expand access to and the speed at which deserving Americans are able to access credit. The technology would also eliminate the potential for fraudulent manipulation of the program. [Read more…]

SoFi Starts Trading on Nasdaq as a Public Company

It has an historic day for SoFi yesterday as the leading fintech company officially became a public company

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Yesterday, Anthony Noto, CEO of SoFi, rang the opening bell on Nasdaq as his company celebrated their first day as a public company.

SoFi merged with a SPAC run by Chamath Palihapitiya called Social Capital Hedosophia V Corp. that closed its last day of trading on the New York Stock Exchange on Friday at $20.15. After completion of the merger the combined company’s shares were transferred to the Nasdaq under the ticker SOFI and the stock closed trading Tuesday at $22.65, a gain of 12%.

At its closing price yesterday the company is now worth $19.6 billion, based on the number of outstanding shares, a substantial increase from the $5.7 billion it was valued at during its last private funding round last year.

SoFi raised $2.4 billion in cash as part of the merger deal and the company said it will use the proceeds to “fuel growth, expand its markets and develop new products.”

In a message to its members yesterday Noto said:

Getting your money right requires more than a financial services provider, it requires a partner—a partner that is there for every major financial decision in our member’s life and all of the days in between. A new generation—raised online, made resilient by financial crises, but fundamentally optimistic about their futures—deserve a lifelong financial partner that can help them realize their aspirations… And as we become a publicly traded company, we look forward to leveraging the power of the public markets to fuel accelerated growth on behalf of our members.

The company has come a long way in the ten years since it launched. The first article I published on SoFi was back in 2012 when I interviewed co-founder Dan Macklin about what they were doing in student loans. Back then they were a quasi peer to peer lender with alumni providing financing primarily for recent graduates to refinance their student loans. [Read more…]

What is LendIt Fintech Nexus? Inside LendIt’s Newest Event

An all-meetings fintech event by the beach in Miami...let’s go!

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We have all missed in-person gatherings. While virtual events can be useful, most of us prefer the immediacy and intimacy when we gather in-person. No more messing with the mute button, laggy wifi and audio issues. In-person is back, and the vast majority of people I talk to are delighted about that.

Here at LendIt Fintech we have heard you. After almost 15 months of endless Zoom calls it is time to return to doing business face to face. And that is what our newest event, LendIt Fintech Nexus, is all about. On September 1-2, the fintech industry will be gathering in Miami for two full days of in-person, impactful meetings. No content, just meetings that will help drive your business forward. Here is a short video we have created that will give you some background.

I want to make it clear right off the bat that Fintech Nexus is not for everyone. In fact, you have to be approved before you can buy a ticket. We will be curating a group of 1,000 executives who want to meet other fintech and banking leaders. We are calling this a “Dealmakers Summit” because this is all about doing business and making deals.

LendIt’s VIP Meetings Team Have Been Doing This for Years

We launched curated VIP meetings back in 2017 and have now successfully delivered thousands of successful meetings over the past five years. These VIP meetings have been a part of our flagship events, separate from the Brella networking for which we are also well known, and those people involved have raved about our ability to provide impactful meetings between VIPs. 

Now, we are expanding this format and bringing our expertise to an all-meetings event, LendIt Fintech Nexus.

Who Should Attend LendIt Fintech Nexus?

There are four different types of attendees who will be at LendIt Fintech Nexus:

  1. Financial institution executives seeking technology solutions and partners to upgrade or replace existing tech stacks
  2. Equity investors looking to meet fintechs
  3. Fixed income investors looking to meet lending platforms
  4. Fintech executives seeking partnerships with or capital from established financial institutions and/or investors

How it Will Work

We will be using state of the art matching technology to help attendees find the right matches. We will also be hand curating many of these meetings. The meetings will be 30 minutes long, which we have found to be the sweet spot for meetings of this nature. We expect that attendees will have a minimum of 10 meetings over two days, with some having many more than that. All meetings will be held in one large ballroom at the Loews Miami Beach Hotel.

You will also have a chance to meet your fellow attendees in more informal settings with breakfasts, lunches and dinners. We will also have a special guest during pre-dinner drinks on September 1.

Register Your Interest Today

LendIt Fintech Nexus will be the first large-scale in-person fintech event in almost 18 months. Apply to attend here. We will be reviewing applications regularly and will be in touch quickly to let you know if you have been approved. 

The next big thing in fintech is here. See you in Miami in September.

Everyone Has an Opinion on Crypto Today

We look at comments made about cryptocurrencies today from a variety of business leaders

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I have had crypto investments since I first dabbled in bitcoin in 2015. Since then, I have expanded my investments to include a wide range of tokens on exchanges like Coinbase and Gemini. For any crypto investor the past seven days has been a wild ride. And it seems that everyone has an opinion about what this all means.

Let’s start with Paul Krugman, the Nobel Prize winning columnist for the New York Times. In this piece last week he basically said that cryptocurrencies have no real use case and have not achieved any meaningful economic role. He even offered up the idea that it has a lot in common with Ponzi schemes. The only hint that Krugman gives any value to crypto is a comparison he makes to gold as a store of value.

I loved the critique of Krugman from Lex Sokolin in his Fintech Blueprint newsletter today:

There is a basic mistake that experts make in looking at new technologies, and novelty generally. And that mistake is to be locked into a particular, well-defined model of the world. When a new thing, whose primary mode of growth is novelty, comes into the picture, it will fail assessment in an excel spreadsheet.

Lex makes the argument that people like Krugman do not really understand what is happening in the world of crypto today. There is a digitally-native generation emerging who are questioning the way things have always been done and they have embraced crypto, not just as an asset class, but as the underpinnings for the restructuring of the financial system.

Hedge fund billionaire Ray Dalio also spoke out about crypto. In an interview that was recorded on May 6 but released today he admitted that he “had some bitcoin”. He has a very different view to Krugman and that he thinks the biggest risk to bitcoin is its success because then governments will be seeking to control the digital currency. He added that he would rather own bitcoin than bonds right now.

Another billionaire that has been quite vocal on all things crypto is Mark Cuban. In this piece today in the Wall Street Journal Cuban explains why crypto is exploding in popularity and the core idea of digital ownership. He was an early enthusiast in NFTs and believes that blockchain technology, in particular Ethereum, is an enormous gamechanger. He is not necessarily bullish on the price of cryptocurrencies but he sees entire industries being transformed with the technology that is underpinning it.

The Federal Reserve has also had some things to say today about crypto. Fed Governor Lael Brainard said in a speech today that a cryptocurrency backed by the central bank could provide a variety of benefits. The first one is that it could help the 20% of the population that is underbanked. It could also lead to a more efficient payments system, particularly for cross-border payments. Here is a quote from her speech:

The Federal Reserve remains committed to ensuring that the public has access to safe, reliable, and secure means of payment, including cash. As part of this commitment, we must explore — and try to anticipate — the extent to which households’ and businesses’ needs and preferences may migrate further to digital payments over time.

Of course, you can’t have an article about high profile opinions in crypto without talking about Elon Musk. And yes, today he added to the large library of commentary he has made about crypto in recent months. He tweeted:

Whenever Musk tweets something positive about bitcoin the price goes up and sure enough right after this tweet it jumped more than 5% in just a few minutes. He does point to a real problem with bitcoin and other “proof of work” cryptocurrencies. The energy required to mine new coins is astronomical and needs to be addressed if they are to have a long future.

I used to receive alerts on my phone whenever the price of bitcoin or Ethereum moved more than 5% quickly. After last week I had to turn it off as these notifications were coming in sometimes every hour and in different directions. Volatility seems to be a hallmark of crypto right now and that makes the naysayers even more convinced of their position.

I am in Mark Cuban’s camp when it comes to crypto. While I am bullish on crypto as an asset class the really exciting piece to all of this is that the technology being developed on decentralized networks today will end up transforming finance completely. But that is an article for another day.

No, Financial Services is Not a Shrinking Industry

A banking analyst says financial services is a shrinking industry; nothing could be further from the truth

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I was reading the Financial Times over the weekend and I came across this article citing a banking analyst’s perspective on the US banking sector. This analyst predicted that US banks could cut 200,000 jobs over the next decade, mainly in branches and call centers. That sounds about right.

But then he added this quote which I thought was stupefying:

If I was giving advice to my kids, I’d say you probably don’t want to go into the financial industry. It’s likely to be a shrinking industry.

I couldn’t disagree more. Now, this banking analyst covers large cap banks and so he is looking at financial services through a pretty narrow lens. But when I look at the financial landscape all I see is so much potential for change with completely new businesses and new business models sprouting up on a regular basis.

Here are five areas where financial services will expand significantly this decade:

  1. Banking as a Service

This is a broad area but one that already has great traction. There are many banks today, large and small, that are enabling businesses to integrate lending, payments and banking services directly into their own products. We are see the largest companies such as Apple and Amazon offering financial products in this way, and fintech companies like Stripe, Marqeta and Cross River doing this as well for companies of all sizes. As more businesses seek to offer some kind of financial service to their clients this sector will continue to grow steadily.

  1. Digital Currencies

[Read more…]

Top 10 Fintech News Stories for the Week Ending May 15, 2021

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Lots of crypto stories again this week but probably the biggest story, particularly for fintech lenders, was the vote in the Senate to repeal the True Lender rule. We have more SPAC news and Figure getting approval for their new alternative trading system (that could be big). Here are what I consider to be the top 10 most important fintech news stories of the past week.

Senate votes to repeal OCC ‘true lender’ rule from The Hill – Demonstrating a misunderstanding of the OCC true lender rule the Senate voted to repeal it in the name of consumer protection. Fintech lenders have more work to do here to educate Congress on this issue.

Mortgage Lender Better to Go Public in SPAC Deal from The Wall Street Journal – Better has been one of the many fintech success stories of the pandemic with a quintupling of loan volume last year to $24 billion. They will be going public via a SPAC at a $6.9 billion valuation.

Figure Obtains Regulatory Green Light For Alternative Trading System from PYMNTS.com – Figure Securities Inc. has received approval to become a broker-dealer and a registered Alternative Trading System for securities held on the Provenance blockchain. Mike Cagney and his team continue to break new ground.

Thiel-Backed Block.one Injects Billions in Crypto Exchange from Bloomberg – A new crypto exchange called Bullish is launching, part of Block.one, with a staggering $10 billion in initial capital.

JPMorgan, Others Plan to Issue Credit Cards to People With No Credit Scores from The Wall Street Journal – For years now at LendIt Fintech we have been featuring innovative ways for lenders to provide credit to the un-scored population. Great to see the big banks finally getting with the program.

Facebook-backed Diem withdraws FINMA application, shifts to US from Banking Dive – Diem is almost unrecognizable now from the original Libra project but it is still focused on digital currency, has moved from Switzerland to the US and is looking to register as a money services business here.

If Chime Isn’t A Bank, Then What Is It? from Forbes – Great piece by Ron Shevlin on the Chime Bank/Not a Bank fiasco. As he points out Chime’s customers don’t care as long as their money is FDIC-insured (it is, of course). So, where does this leave all the other neobanks? We need a new word…

Lili, a neobank aimed at freelancers, raises $55M as it passes 200K users from TechCrunch – With an estimated 40% of workers today being freelancers Lili has a big target market and now is well capitalized to go after this space.

MoneyGram to let cryptocurrency holders cash in their investments from CNBC – MoneyGram may not strike you as a crypto innovator but it has teamed up with bitcoin exchange and ATM operator Coinme to allow its customers to buy and sell crypto at thousands of MoneyGram locations throughout the US.

LendingClub Chooses Alto as Their New IRA Provider from LendIt Fintech News – With LendingClub’s retail investor marketplace shutdown, thousands of IRA investors are seeing their cash build up. They can now seamlessly move that money to Alto, a leading alternative investment custodian.

LendingClub Chooses Alto as Their New IRA Provider

The 13,000 LendingClub IRA investors can move their accounts to Alto, a leader in IRA alternative investing

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Eric Satz soon realized there was a problem. The year was 2014 and he was trying to use his IRA money to make an equity investment in a private company. He discovered it was legal, but his current custodian couldn’t help him. He went looking for someone who could.

After weeks of research, he found a couple of companies that said they could do it. He chose one. The process was clunky and slow and aggravating. He managed to make the investment, but it took eight weeks, dozens of pages of faxed documents and a lot of expletives. Eric did most of the work himself, but the custodian still ended up with their same asset “management” fees and, for an administrator, they were not that helpful. So, the idea for Alto was born.

I caught up with Eric and his team last week in advance of the big announcement they are making today.

Alto calls itself a next-generation self-directed IRA platform and its focus is on making it quicker and easier for individuals to invest in alternative assets through their IRA. I opened up my own Alto account earlier this year (before I knew they were working with LendingClub) when I decided to make investments in Masterworks and FarmTogether.

I can attest that the process was simple (or as simple as a self-directed IRA can be) and I appreciated the fact that I could do everything online. There was no need for sending PDF documents back and forth, no need for phone conversations, it was an online experience that was the best I have encountered in the self-directed IRA space.

LendingClub’s IRA Investors Can Move to Alto Now

[Read more…]

Top 10 Fintech News Stories for the Week Ending May 8, 2021

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This week was primarily about crypto with so many big stories focusing on digital currencies. Square is quickly becoming a crypto trading platform as that becomes the biggest part of their business and stablecoins were in the news at PayPal and Visa. Here are what I consider to be the top 10 most important fintech news stories of the past week.

Federal Reserve Opens Consultation on Access to the Payments System from Crowdfund Insider – With many fintechs obtaining bank charters today the Federal Reserve has proposed new guidelines on how they can gain access to the Fed payments system. This is a big deal.

The Paycheck Protection Program is out of money from The New York Times – Even though the Paycheck Protection Program is not due to end until May 31 the program ran out of funding this week.

Cash App Is King at Square from The Wall Street Journal – Square released their first quarter earnings this week with some astounding growth numbers courtesy of bitcoin trading in their Cash App.

PayPal has held exploratory talks about launching a stablecoin: sources from The Block – PayPal is exploring creating its own stablecoin as it apparently has been in contact with some of the industry’s stablecoin protocol developers.

Fintech Wealthsimple raises about $610 million in funding round from FinLedger –  It was a relatively quiet week as far as big fundraising announcements were concerned with Canadian fintech Wealthsimple leading the way by announcing a $610 million round.

Galaxy Digital to Buy BitGo in Crypto Sector’s First $1 Billion Deal from The Wall Street Journal – The first billion dollar deal in the crypto space has been consummated with Galaxy Digital, a leading crypto-focused financial-services firm, acquiring BitGo, a leading institutional digital asset platform.

Robinhood Slams Buffett And Munger For ‘Insulting A New Generation’ Of Investors from Forbes – Arguably the most successful investors in history, Warren Buffet and Charlie Munger of Berkshire Hathaway, have directly criticized Robinhood for taking advantage of new investors’ “gambling instincts”. Robinhood hit back.

Chime has agreed to stop using the word ‘bank’ after a California regulator pushed back from TechCrunch – After an investigation from the California financial regulator Chime will no longer use the word “bank” in its promotions as it is not a bank (yet).

Tala and Visa Partnership Seeks To Ignite Stablecoin Use In Emerging Markets from PYMNTS.com – Tala, one of the leaders in providing access to unbanked populations throughout the developing world, is teaming up with Visa to bring stablecoins into digital wallets which could be used for cross border payments.

Bitcoin is coming to hundreds of U.S. banks this year, says crypto custody firm NYDIG from CNBC – In another sign that crypto is going mainstream, according to NYDIG banks are asking for crypto custody services driven by customer demand.

Highlights from LendIt Fintech USA 2021

Select insights from the virtual keynote stage at the recent LendIt Fintech USA event

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The keynote stage at the Javits Center, the heart of the virtual LendIt Fintech USA

Last week the fintech world gathered online for the ninth annual LendIt Fintech USA event. We exceeded even our own high expectations as our second big online event featured many of the biggest names in fintech. Bo Brustkern and I flew to New York City (my first flight in 14 months) where we had our production studio set up inside the Javits Center. We used the keynote stage there, the exact same stage we had used for our 2017 in-person event, but the audience and speakers were 100% online.

As I do every year I will share some of the highlights from our virtual keynote stage below and you can watch our highlights video below.

We kicked things off with the hottest space in fintech, buy now pay later (BNPL). Nigel Morris, the co-founder and Managing Partner at QED Investors moderated a discussion with Adam Hughes, the CEO of Amount and Denny Nealon, the CEO of Barclays US Consumer Bank. Adam explained why BNPL is so popular today. It is all about the technology that enables a smooth user experience at checkout, so a decades old concept has seen a resurgence in the past couple of years. To coincide with their keynote, Amount and Barclays announced that they would be working together to offer BNPL solutions for Barclays merchants in one of the most significant partnerships in the space. Denny said that their the decision to offer BNPL was driven by their partners and they chose Amount so they could provide a fintech-like experience. [Read more…]

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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