Bunq's Historic Profit Milestone and the Road Ahead

Hey FinTech Fanatic!

Starting with news from my hometown Amsterdam: Despite achieving profitability for the first time in eleven years, Bunq's shareholders were required to provide additional funds last month.

Ali Niknam, the bank's CEO and a major shareholder, along with Pollen Street Capital, invested €29 million to bolster the bank's core capital. This move was necessitated by the bank's leverage ratio, which was at risk of falling below the 3% threshold. Bunq's entire profit of €53 million from the previous year was allocated to its reserves, following a similar shareholder contribution of €58.5 million the year before.

The bank's rapid growth and its offering of relatively high interest rates on savings accounts have attracted significant deposits. These funds were largely placed with the European Central Bank, maintaining a mandatory minimum of 3% in own capital against lent out funds. This ratio dropped from 5.1% to 3.61% between 2022 and 2023.

Niknam views these capital injections as part of Bunq's growth strategy, indicating that future infusions might be necessary and that shareholders are willing to support such measures. The bank has managed its growth carefully, adjusting its strategies to control its pace of expansion. For instance, Bunq has not increased its interest rates in the Netherlands since July, in contrast to its actions in Spain and Germany aimed at attracting more deposits and gaining market presence.

Historically targeting a young, international, and digital clientele willing to pay for premium mobile banking services, Bunq entered the savings market in early 2022. It offered free savings accounts with higher interest rates than traditional banks, leading to a growth in customer deposits from €1.1 billion to €6.9 billion.

Niknam's future plans include expansion into the United Kingdom and the United States. Although a plan to obtain a U.S. banking license was retracted due to unexpected procedural differences, Niknam remains open to resubmitting the application or establishing a presence without a license.

I've compiled more updates from the global FinTech industry for your perusal below👇

Have a great weekend!

Cheers,

Marcel

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Now let's dive into the news of today:

PODCAST

🎤 In this "The FinTalks" Podcast, Innovance Global Partnership Director, Togay Çınlarses, shared insights into his company's vision, global partnerships, and the future of the industry. Listen to the full podcast episode here

#FINTECHREPORT

📊 Market Insights from FinTech Firms Serving Women Customers based on the findings of the recent IFC - International Finance Corporation and Dalberg survey. Check out the full report for further insights

INSIGHTS

💳 Mastercard plans to raise credit and debit card fees by over $250 million despite settlement. Almost immediately after agreeing to reduce “swipe” fees charged to merchants to process credit card transactions, Mastercard plans to increase fees for both credit and debit card transactions by more than $250 million this month, the Merchants Payments Coalition said today.

FINTECH NEWS

🇫🇷 Wise Platform teams up with embedded finance FinTech Swan. Wise fully integrates its Wise Platform API into Swan's technology stack, enabling seamless international payments. This approach offers two key benefits: reducing implementation timelines and costs, and keeping the all-in-one user experience that makes Swan so successful.

🇺🇸 Tally, a FinTech startup known for helping people diligently pay down their credit card debt, announced the release of its white labeled credit card debt management software, a B2B offering that scales Tally’s mission to give consumers a better path to debt management.

🇩🇪 Tamamliyo, a Turkish FinTech developing microinsurance products and integrating them into e-commerce companies' payment processes, has announced its expansion into the European market under the name komplet.io, with Germany being its primary target. 

🇺🇸 Papaya Global announced a partnership with Fortris, the digital assets treasury operations platform. Explore further details here

🇺🇸 Capchase introduced Capchase Infra, a software solution for banks and other lending institutions to make informed credit decisions when evaluating high-growth companies by automating their data collection, underwriting, and risk monitoring processes.

🇬🇧 ClearBank, a British FinTech, scored its first full year of profit after higher interest rates helped drive a 91% jump in revenues. The firm swung to an £18.4 million ($23.3 million) pre-tax profit in the year ending Dec. 31, 2023, according to financial statements released Thursday.

🇵🇭 UnaFinancial launches lending app in the Philippines. UnaCash was started as a BNPL service, while in July, 2023 it was upgraded to offer POS loans to customers. Now, the service also provides Instalment Loans amounting from ₱3,000 to ₱50,000 with the repayment period from 2 to 12 months. 

 🇰🇪 LemFi receives regulatory approval from CBK to operate remittance services in Kenya. The FinTech company which entered the East African country last year June, said the regulatory approval is significant step in its promise of seamless international payments to thousands of Kenyans in the diaspora.

🇺🇸 Klarna ‘Wikipink’ challenges broken US credit system with transparent data. Klarna announced in an industry-first, the launch of a new online initiative - Wikipink - aimed at setting new standards for transparency and responsibility in the credit and lending industry.

PAYMENTS NEWS

🇺🇸 Visa announced the launch of Subscription Manager, a new, all-in-one service for financial institutions to provide Visa cardholders with a simple, convenient way to track their subscriptions, all from the palm of their hands.

🇦🇪 Telr granted in-principle approval for the Retail Payment Services & Card Schemes license from CBUAE. With this approval, Telr is well-positioned to accelerate growth and continue empowering businesses and consumers with innovative, tailored payment solutions in the UAE.

🇫🇷  Worldline and Tabesto launch 'all-in-one' payment kiosk. This collaboration combines Worldline’s extensive payment expertise with Tabesto’s proficiency in kiosk development to deliver a unique customer experience. Read more

🇳🇱 CAB Payments launches in Europe. From its base in the Netherlands CAB Payments Europe will provide access to a global pool of G10 and hard-to-reach market currencies along with wholesale FX and cross-border payments, and last-mile delivery services.

🇧🇷 Automatic Pix is going through a tough phase, says the president of the Central Bank. The system's implementation is scheduled for November, but the mobilization of the staff compromises its development. The goal is for this feature to facilitate the recurring billing of products and services, such as subscription services.

DIGITAL BANKING NEWS

🇳🇱 Dutch mobile banking firm Bunq has become the first EU neobank to report an annual profit on the back of a surge in users as it gears up to re-enter the UK market and mulls an IPO. Bunq posted a net profit of €53.2m (£45.6m) in 2023, swinging from a €10.5m (£9m) loss in 2022. 

A collection of seven central banks are working with the BIS to explore tokenisation of cross-border payments. The central banks plan to join forces with the private sector for Project Agorá, exploring how tokenisation of wholesale central bank money and commercial bank deposits on programmable platforms can improve the monetary system.

🇺🇸 Piermont and Sutton banks face FDIC consent orders. The orders highlighted purported shortcomings in the banks' BaaS activities and partnerships with FinTech firms. Piermont Bank was found to have engaged in unsafe and unsound banking practices. Meanwhile, Sutton Bank faced similar charges, along with violations of the Bank Secrecy Act in a separate order.

🇷🇴 The first Romanian neobank officially launched on the market on Thursday, April 4. Named Salt Bank, the new entity is based in Romania and is wholly owned by Banca Transilvania Financial Group, the largest bank in SEE. The new bank promises to offer a 100% digital experience, combining the financial stability of a traditional bank with FinTech technology.

🇨🇳 MoneyGram & Tencent to offer remittances to Weixin Pay users in China. The partnership enables consumers to send funds through MoneyGram Online, MoneyGram’s direct-to-consumer website and app, directly to recipients’ Weixin Pay wallet, a payment and digital wallet service in China.

BLOCKCHAIN/CRYPTO NEWS

🇺🇸 Xoom enables PayPal USD as a Funding Option for Cross-Border Money Transfers using USD converted from PayPal USD (PYUSD), a U.S. dollar-denominated stablecoin. This enables users to send money to recipients in about 160 countries worldwide without Xoom transaction fees.

🇺🇸 Ripple to issue stablecoin backed 100% by cash equivalents. According to the company, a third-party accounting firm will audit the reserves for these assets, and Ripple will publish monthly attestations. 

🇳🇬 Detained Binance exec Tigran Gambaryan was hoping for some form of relief as he went to court in Nigeria yesterday. Instead, officials botched the routine procedures and forced the court to postpone the hearing two weeks… More on that here

DONEDEAL FUNDING NEWS

My Monthly Top 10 European FinTech Funding Rounds👇

🇦🇺 Australian banking software vendor Constantinople bags $33m in Series A round. The company will be using the new funds to develop its product offerings and help finance its 60-strong full-time workforce. According to the Financial Review, the cash injection will also be utilised to expand the company’s footprint overseas. 

🇬🇧 Revolut alumni quietly raise £2.5m in pre-seed funding from Lightspeed and Cocoa for their business verification startup Condukt, according to Companies House filings. Condukt’s website currently describes the project as “just another KYB provider”. Read more

🇧🇭 Daleel successfully secures strategic investment from Hambro Perks Spring Studios and Flat6Labs UAE. This investment round will enable Daleel to launch significant financial partnerships. It will also aid Daleel's expansion in Saudi Arabia and the UAE, accelerating growth and securing an Open Banking license.

🇨🇦 Brim Financial secures $85 million in series C funding to fuel global expansion. Brim’s modular platform and highly scalable product suite fully empowers financial institutions, FinTechs and large international brands to run and evolve their product platforms to meet their customer and market needs. 

🇺🇸 Mastercard invests in Hello Alice. The company provides access to credit, loans, grants, and business planning services to small business owners, enterprise customers, and hundreds of business networks across the United States. Link here

🇬🇭 Ghanaian FinTech company Zeepay Ghana Ltd announced the completion of an equity investment by pan-African investment firms Africa50, Oikocredit, Injaro, Verdant Capital Hybrid Fund, and I&P. The funds will go towards expanding Zeepay’s operations in Africa and the Caribbean.

🇺🇸 Omniwire receives a $2 million investment that will support its mission to reshape the financial technology landscape with its innovative solutions. This investment will accelerate Omniwire’s growth as it continues to expand its services to meet the evolving needs of clients and partners. 

🇮🇳 Sachin Bansal’s FinTech Navi seeks $2B valuation in its first major external fundraise. Bansal has largely self-funded Navi up to now, and this would be the Bengaluru-headquartered startup’s first large outside fundraise since it was founded in 2018. Read the full piece here 

MOVERS & SHAKERS

🇺🇸 Provenir names Christopher Brown senior sales exec, Middle East, Africa, and Turkey. This appointment reflects the company's growing success and rising demand for its products and services across the region. Chris will be responsible for managing the sales operations and defining the go-to-market strategy for Africa, helping Provenir expand its presence in the region.

🇺🇸 Upfort names Brett Sadoff, former Head of Insurance for At-Bay and HISCOX Executive, as Advisor. In this role, Sadoff is responsible for helping to steer Upfort’s strategic vision and advancing the company’s mission to accelerate the world’s journey toward cyber resilience.

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