Google abandons banking plans 🤯; Stripe goes crypto 😳; Tesla takes on InsurTechs 😮; PayPal is solidifying its Super App with a retail push📲

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October was a crazy hot month in the FinTech world. We will look at Google abandoning its banking plans; Stripe going crypto (again!); Tesla going head-to-head with InsurTechs; PayPal further solidifying its Super App, and other super interesting news and developments.

Without further ado, let us dive into what has happened in the financial technology sector the last month. Let’s connect the dots.

Google abandons banking plans 🤯

Breaking🔥 Technology giant Google is scrapping its plans to offer banking services directly to users.

The shift comes nearly 2 years after the company first announced its banking plans and less than 1 year since the technology giant publicly announced Plex mobile-first bank accounts.

Origins 🔄 In 2020, Google said it would let users open a bank account through its Google Pay app, in a partnership with Citigroup and Stanford Federal Credit Union beginning in 2021. At the time, Google said it would offer a service called “Plex” checking and savings accounts that would have no monthly fees, overdraft charges, or minimum balance requirements.

Users would have also been able to request a physical debit card, which would have run on Mastercard’s rails.

But why? 🤔 The Wall Street Journal first reported news of the scrapped plans Friday, stating a series of reportedly missed deadlines along with the departure of the Google Pay executive overseeing the project caused it to begin to fold. 

The shift 👉 A Google spokeswoman said the company is shifting its focus to “delivering digital enablement for banks and other financial services providers rather than us serving as the provider of these services.” In simple terms, Google will focus on selling Google Could to banks and other financial institutions.

✈️ THE TAKEAWAY

FinTech is hard. This is yet another illustration that FinTech is hard, folks. Also, it’s a good answer to everyone who was asking “so what will happen to your FinTech if Google will do it?”. FinTech is hard, and Google can’t do everything, apparently. On the other side, despite internal mismanagement (I won’t go into it here as it’s probably worth a separate article), there are 2 strong factors worth mentioning. First, Google has the opportunity of selling billions in cloud services to banks and FIs. Second, banking means more regulation and oversight, which could directly impact their overall business and growth, and they don’t want that. Zooming out, being an enabler/B2B player is much easier, means fewer headaches, and potentially is much more profitable.

PayPal is solidifying its Super App with a retail push📲

The news announcement 📣 The PayPal-owned digital promotions platform Honey has just introduced cash back through PayPal. This is a new way for US users to redeem reward points.

What is it? 🤔 Users can link their Honey and PayPal accounts to redeem Honey Gold rewards points for cashback sent to their PayPal balance. Users can also redeem their rewards points for gift cards to participating stores.

Additionally, Honey also introduced a new iOS Safari browser extension for US users to enable simpler mobile shopping. Once users download the Honey app and enable the extension, Honey will automatically find coupons and cash-back offers when they shop on Safari.

✈️ THE TAKEAWAY

This is a huge opportunity for PayPal. Having recently launched its super app, which includes a Shopping hub where customers can discover deals, make purchases, and earn rewards, PayPal is trying to give it a boost with a retail push. Integrating Honey’s rewards program directly into PayPal should bring more Honey users to PayPal’s app, which should lead to growing its user base and setting up cross-promotional opportunities for PayPal’s other shopping and financial services. In the longer term, Honey’s rewards integration should help PayPal capture more payments volume and aid its retail push, especially ahead of the holiday season. Adding all that together, we have a solid Super App proposition that’s definitely worth keeping an eye on.

Stripe goes crypto 🤯

Job postings 👥 Payments giant Stripe has begun assembling a crypto engineering team to lead its future in digital assets.

The team – described in LinkedIn posts and job listings – will be run by Guillaume Poncin, Stripe’s former head of engineering for banking and financial products. He is looking to hire at least four staffers to help plot Stripe’s crypto strategy.

The roles 👉 Those engineers “will design and build the core components that we need to support crypto use cases,” the job posts said. “Crypto is a brand new team at Stripe.”

The engineering team will “lay the foundation to support and inform Stripe’s crypto strategy,” according to the job post, and will affect everything from Stripe’s user interface to its backend operations and even its payment and identity systems. 

The positions are limited to engineers based in the United States, who must also have a background developing in the crypto space in addition to more than 10 years of experience as an engineer.

✈️ THE TAKEAWAY

The calculated switch. One must note that the hiring move by $100B FinTech giant comes 2 years after Stripe’s CEO Patrick Collison said he was “very skeptical” of cryptocurrency. More importantly, one must remind you that Stripe initially started accepting Bitcoin back in 2014, but withdrew support four years later due to its slow transaction times and rising fees. In a blog post from Jan. 23, 2018, Stripe stated that it may return to the sector once crypto payments are “viable,” pointing to the development of the Lightning Network and “high-potential” projects emerging on the Ethereum blockchain. Looks like the time has come, especially given that pressure from the competition is rising. Square, PayPal, Mastercard, and Square have all entered the crypto sector. Square launched BTC trading via its Cash App in 2018, PayPal launched crypto support for U.S. customers in October 2020, while Mastercard announced in February this year that it would support multiple crypto assets on its network.

Tesla takes on InsurTechs 😮

The news 🗞 Tesla is going further into the insurance business marking the electric carmaker’s first usage-based insurance (UBI) product after launching a traditional insurance program in California 2 years ago.

The USP 🥊 In Texas, Tesla’s premiums will be based on its proprietary safety score.

• The scoring system was first used to determine whether a driver could access their car’s “Full Self-Driving” option, and it will now be used to underwrite Tesla drivers who buy its insurance in the state.
• The score is calculated by analyzing the customers’ real-time driving behavior based on five criteria: instances of forward-collision warnings, hard braking, turning corners aggressively, unsafe following, and forced Autopilot disengagement.
• The price will be revised every month, with those deemed “average” drivers said to save 20% to 40% on their premiums compared with other providers.

✈️ THE TAKEAWAY

Tesla is a FinTech. With this new product, Tesla could potentially offer cheaper and more flexible coverage than InsurTechs. One straightforward example is UBI InsurtTch Metromile, which charges not only a rate based on driving distance and behavior but also a base rate that takes into account traditional factors like claim history, age, and gender. By contrast, Tesla says it will solely focus on driving behavior and will only charge one rate (and this is a huge advantage). Furthermore, monthly renewals make it more flexible than Root, which only uses driver data to change its prices every six months. Finally, Tesla’s offering is also seamlessly embedded in its cars, whereas competing UBI offerings tend to require either installing a physical device or downloading an app. When you add it all together, Tesla is uniquely positioned to seamlessly tap into the Insurance market. And it’s an exciting opportunity as there’s a growing demand for such solutions: various forecasts estimate 52.5M US drivers to buy UBI coverage by 2023, up from 37M this year.

Extra Reads & Quick Bites for Curious Minds🧠

• Cross-border payments 🇸🇬🇲🇾 The central banks of Singapore and Malaysia say their customers will be able to conduct real-time cross-border payment transfers via a mobile number starting next year. The Monetary Authority of Singapore (MAS) and the Bank Negara Malaysia (BNM) announced the project this week, calling it a “phased linkage” of the payment systems run by Singapore’s PayNow and Malaysia’s DuitNow. The first phase will be launched in the fourth quarter of 2022, allowing customers to make real-time transfers between Singapore and Malaysia using a mobile number.  
• Visa’s BNPL push 💳 Visa has expanded its Visa Installments program in Australia, partnering with financial institution ANZ as well as merchant payment provider Quest, which will help shoppers access buy now, pay later (BNPL) financing. Shoppers can hence use the option via their ANZ credit cards during checkout in stores and online. The Visa Installments Solution will offer BNPL financing on the cards they already use or have on their phones.
• Google’s bet on Africa💸 Google will invest $1B in Africa in the next five years to enhance its internet connectivity and help startup companies get some financial backing, according to a CNET report. The search platform announced an Africa Investment Fund that will give startups access to its employees and technology during the Google for Africa event, the report said. Google is also teaming with nonprofit Kiva to offer $10M in low-interest loans for small businesses in Ghana, Kenya, Nigeria, and South Africa.
• Unsuccessful banking charter play 🏦 Oportun, a specialist in low- to moderate-income lending, which services many Latinos, has withdrawn its application for a bank charter, PYMTS reported. The withdrawal was voluntary, and a report from the company says the CFPB was looking into claims that Oportun had violated consumer protection laws with its collection practices, especially those which centered around hardship treatments that the company gave during the pandemic. This follows Monzo, the British challenger bank, which has backed out of its effort to go after a U.S. banking license because it saw the OCC wasn’t likely to approve it. Banking in the US is hard… 🤷♂️

Money Moves💸

• Mexico-based Konfio has secured $110M in Series E funding round at $1.3B a valuation led by Tarsadia Capital for expansion and platform improvement.
• The US-based InsureTech Ladder closed a $100M Series D round at a valuation of about $900M after revenues more than quadrupled over the past year.
• Mobile bank N26 has reportedly closed a €700M raise, bumping up its valuation to the €8B mark.
• Brazil-based cloud-native core banking platform Pismo has announced a $108M Series B fundraising round, led by SoftBank, Amazon, and Accel.

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P.S. You might enjoy my earlier pieces as well:

👉 A Wise pitch deck that led to London’s biggest and most successful direct listing ever

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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