Morgan Stanley's partnership with Wise signals new era in x-border payments 💸; dLocal is exploring strategic sale 👀; CFPB's major legal action 😳

Morgan Stanley's partnership with Wise signals new era in x-border payments 💸; dLocal is exploring strategic sale 👀; CFPB's major legal action 😳

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  6. Chime takes major step toward 2025 IPO with confidential SEC filing 📑🔔 [quick recap of Chime’s biz model and latest numbers, why it matters & what’s next for FinTech + bonus read with some IPO resources inside]
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Last week (16-20 December) was another crazy week in the new age of finance. We’re looking into Morgan Stanley which just partnered up with Wise for cross-border payments (why it matters & what can we expect next in Finance & FinTech space + bonus deep dive into Wise & why I’m bullish); the growing market consolidation as dLocal is exploring strategic sale (what it’s all about & what’s next + bonus dive into dLocal & their latest financials); CFPB which just launched major legal action against JPMorgan, Bank of America over Zelle fraud (why this matters & what’s next + bonus deep dives into the latest financials of JPM, BoA, Wells Fargo & many others), and explore other interesting news and developments.

Without further ado, let us dive into what happened in Finance 2.0 last week. Let’s connect the dots.

Morgan Stanley's partnership with Wise signals a new era in cross-border payments 🤝💸

The news 🗞️ Banking giant Morgan Stanley has become the first major investment bank to adopt Wise's cross-border payment platform. The partnership enables Morgan Stanley to offer high-speed international payment settlements to its corporate clients through Wise's established infrastructure.

Let’s take a quick look at this and see why it matters.

More on this 👉 The collaboration represents a strategic shift in how investment banks approach cross-border transactions. Through integration with Wise's platform, Morgan Stanley will incorporate the payment functionality into its newly launched TFX Hub, focusing initially on serving U.S. corporate clients with international market needs.

The partnership leverages Wise's impressive capabilities, including connections to over 65 licenses and six direct payment systems, allowing 63% of cross-border payments to be completed in under 20 seconds.

While specific fee structures remain undisclosed, the revenue stream is expected to provide more stability compared to traditional trading income, which often fluctuates with market conditions.

Zoom out 🔎 This partnership marks yet another turning point in how traditional financial institutions approach financial technology integration. For Wise , securing Morgan Stanley as its first investment banking partner demonstrates the platform's growing credibility in the institutional financial sector. And the stock market is clearly in line with that:

The company has already established partnerships with over 90 banks globally, including a recent agreement with Standard Chartered for operations in Asia and the Middle East.

✈️ THE TAKEAWAY

What’s next? 🤔 Looking ahead, it’s clear that we’re going to see accelerated adoption of FinTech solutions by other (investment) banks seeking to remain competitive in cross-border payment services. Additionally, expect an increased focus on institutional partnerships by FinTech companies, moving beyond their traditional consumer and small business markets. Finally, the Wise & Morgan Stanley deal also signals the potential evolution of revenue models in investment banking, with greater emphasis on stable, fee-based income streams from digital services. Zooming out, the partnership also suggests a broader trend of traditional financial institutions recognizing the value of partnering with FinTech specialists rather than developing proprietary solutions. This strategic shift could lead to more efficient capital allocation and faster innovation in the financial services sector, ultimately benefiting end clients through improved service delivery and potentially lower costs.

More FinTech consolidation? dLocal is exploring strategic sale 😳💸

The news 🗞️ Uruguay-based payments provider dLocal, currently valued at approximately $3.25 billion, is exploring potential strategic options, including a sale.

The company, backed by private equity firm General Atlantic as its largest shareholder, has enlisted Morgan Stanley to gauge acquisition interest from potential buyers, including private equity firms and major financial technology providers.

Let’s take a quick look at this.

More on this 👉 The exploration of a sale comes at a crucial juncture for dLocal , which has faced various challenges despite its extensive operational footprint across Latin America, Africa, and Asia. The company's shares, trading on the New York Stock Exchange since its 2021 IPO, have experienced a 33% decline year-to-date, affected by weak emerging market currencies and decreased cross-border payment volumes.

However, dLocal has shown resilience, reporting a 5% increase in gross profit in its latest quarterly earnings.

Also, we must note that this isn't dLocal's first consideration of a sale, as a similar initiative last year didn't materialize due to disagreements over financial terms. The current exploration thus reflects broader industry trends, as the payments sector undergoes significant consolidation following the post-pandemic normalization of digital payment volumes.

✈️ THE TAKEAWAY

What’s next? 🤔 The potential sale of dLocal could have some interesting implications for both the company and the broader FinTech industry. Here’s what we should be thinking about:

  • Industry Consolidation: The payments sector is likely to see accelerated consolidation as companies seek scale and technological capabilities to compete effectively. This trend is evidenced by recent transactions like Advent International's $6.3 billion acquisition of Nuvei.
  • Market Evolution: The exploration highlights the challenges facing FinTech companies in emerging markets, particularly regarding currency volatility and market-specific operational hurdles. Future success in these markets may require deeper pockets and more robust infrastructure that larger financial institutions can provide.
  • Strategic Positioning: For potential acquirers, dLocal represents an attractive opportunity to gain immediate access to emerging markets and a prestigious client base that includes Amazon, Microsoft, and Google. This could trigger increased interest in similar regional payment providers, potentially leading to more M&A activity in the sector.

Looking ahead, one thing is clear - we should expect increased scrutiny of FinTech valuations and business models, particularly in emerging markets. And the outcome of dLocal's strategic review could therefore set important precedents for how similar companies approach market challenges and strategic alternatives in the evolving digital payments landscape. Will be watching this closely 🔎

ICYMI: Emerging markets payments pioneer dLocal shows resilience amid growing pains 💪💳 [unpacking the most important numbers, what they mean & what’s next for dLocal]

CFPB launches major legal action against JPMorgan, Bank of America over Zelle fraud 😳🏦

The news 🗞️ The Consumer Financial Protection Bureau (CFPB) has initiated a significant lawsuit against three of America's largest banks - J.P. Morgan , Bank of America , and Wells Fargo - along with Zelle's operator Early Warning Services, alleging inadequate consumer protection measures on the popular payment platform.

Let’s take a look at this and see why it matters.

More on this 👉 The lawsuit, filed in Arizona, claims that these institutions rushed Zelle to market without implementing proper safeguards, resulting in approximately $870 million in fraud-related losses across the three banks since Zelle's launch in 2017.

The CFPB's investigation revealed that consumers were often left vulnerable to various fraud schemes, including account takeover fraud and unauthorized transfers.

CFPB Director Rohit Chopra emphasized that the banks' competitive pressure to counter other payment apps led to hasty implementation without adequate security measures. The lawsuit specifically targets these three banks, which account for 73% of Zelle's transaction volume, though Early Warning Services is owned by seven major U.S. banks in total.

The response 🥊 The banks and Zelle strongly contest these allegations. Bank of America maintains that 99.95% of transactions proceed without incident, while JPMorgan Chase characterizes the lawsuit as politically motivated and an overreach of CFPB's authority.

Zelle's spokesperson argues that their fraud prevention measures exceed legal requirements and claims the CFPB's actions could negatively impact smaller financial institutions.

✈️ THE TAKEAWAY

What’s next? 🤔 At the core, this legal action signals a pivotal moment for the digital payments industry. Here’s what we can expect next:

  • Enhanced Security Protocols: The FinTech industry may see accelerated implementation of more robust fraud prevention measures, potentially including advanced identity verification systems and cross-platform fraud detection.
  • Regulatory Framework Evolution: This case could establish new precedents for how payment platforms balance convenience with security, potentially leading to standardized security protocols across the industry.
  • Market Restructuring: Smaller banks and credit unions might face increased costs to maintain compliance, potentially leading to industry consolidation or new partnership models.
  • Consumer Behavior Impact: The outcome could influence consumer trust in digital payment platforms and potentially shift market share among various payment solutions.

That said, this lawsuit represents a critical juncture in the ongoing evolution of digital payments, with implications extending far beyond the immediate parties involved. The resolution will likely shape the future of consumer protection standards in financial technology and influence how banks approach the balance between innovation and security in payment services. We will be watching this 🔎

ICYMI: JPMorgan Chase UK makes strategic move into credit cards 🇬🇧💳 [what it tells us & what we can expect next + bonus deep dives into JPM’s latest financials & more bonus reads inside]

Bank of America’s 3Q24: a resilient giant poised for growth 📈 [breaking down the most important numbers, what they mean & what’s next for BoA]

Wells Fargo’s Q3 2024: weathering the storm, but clearer skies ahead? 🌤️🏦 [a closer look at their Q3 2024 numbers, what they mean & what’s next + bonus deep dives into two other finance behemoths]

Morgan Stanley's resilience shines amidst market volatility 👏📈 [breaking down the latest Q3 2024 financials, what they tell us & what’s next + bonus deep dives into other financials behemoths inside]

Goldman Sachs firing on all cylinders as investment banking prowess shines 😤💸 [unpacking the most important numbers, what they mean, and whether Goldman is worth your time & money in 2024 + more bonus reads & deep dives inside]

Citi's transformation: high-risk, high-reward bet on banking turnaround 🏦 [unpacking Citibank’s most important Q3 2024 numbers, what they mean & whether Citi is worth your time and money in 2024 + bonus deep dives into other financials giants]

Extra Reads & Quick Bites for Curious Minds 🧠

  • Remote Introduces Stablecoin Payments for Global Contractors 🌍 Remote in partnership with Stripe has launched stablecoin payments for contractors in 69 countries, starting with USDC on the Base network. This feature, initially available to US-based companies, offers faster compensation for international contractors while ensuring regulatory compliance. Stablecoin payments integrate with Remote's existing contractor management services, providing a unified platform for onboarding, invoicing, and payments. The system enables near-instant payouts in USDC, addressing delays in traditional international payment processes. Disclaimer: Stripe is using Zero Hash for this, and I’m part of Zero Hash .
  • Neonomics Files Complaint Over Anti-Competitive Practices in Norway's Payments Market 🚨 Neonomics has filed a complaint with the Norwegian Competition Authority, alleging anti-competitive practices by the country's banking sector. The open banking data vendor claims that banks have undermined the EU's PSD2 directive by limiting access to critical payment markets, blocking direct debit payments, and applying unreasonable prices and terms for essential services. These practices are said to create barriers for third-party providers and favor established players like Vipps, Visa, and Mastercard. ICYMI: Norwegian FinTech makes history as first Apple Pay competitor on iPhone📱🇳🇴 [what it’s all about, why it matters & what’s next + bonus dives into Apple & Co]
  • Bulgaria Joins TIPS, Boosting Euro Integration 🇪🇺 The European Central Bank has welcomed Bulgaria to the TARGET Instant Payment Settlement (TIPS) service, following a successful migration in December 2024. The Bulgarian National Bank, BISERA payment system, First Investment Bank AD, and Central Cooperative Bank AD are now part of TIPS, with more providers expected to join in 2025. This move supports Bulgaria's plan to join the euro area, enabling instant EUR transfers for individuals and businesses. TIPS operates 24/7, facilitating instant payments in central bank money and adhering to the SEPA Instant Credit Transfer scheme.

Money Moves 💸

  • Chainalysis has purchased Hexagate, a company specializing in web3 security solutions that detect and tackle real-time threats, including cyber exploits.
  • PayPal Ventures joined a $30M round in the fraud prevention platform Bureau.
  • Parafin, which builds embedded finance infrastructure, has announced the close of its $100M Series C financing at a $750M valuation.

Continue reading by subscribing to Linas's Newsletter. You will receive fresh news about FinTech with hot takeaways every day.

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

👉 Top Resources for Startup Founders, CEOs, Investors & VCs 🧠

👉 The Future of Finance: 10 FinTech & FinServ M&A predictions for 2024 🔥

👉 10 FinTech and Finance stocks to include in your portfolio for 2024 💼 | Part I

👉 The Future of Finance: 10 FinTech & FinServ M&A predictions for 2024 🔥

***

About: I am a business developer, sales professional, and FinTech strategist, as well as a 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 the world’s leading digital asset infrastructure startup where I’m responsible for revenue operations, I'm an active member of the FinTech community and a TechFin evangelist.

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Luke Mulcahy

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5d

Insightful as always! Excited to dive into the Wise partnership and the implications for Finance 2.0. Also intrigued by the CFPB action—definitely a space to watch. Thanks for keeping us informed!

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Albert Ramos Jr.

Texas Fractional CFO | I save you money while building your AI Strategy and GPTs for you too

5d

I couldn't agree more please keep sharing your value Linas Beliūnas thank you

Gérard Ferreira

Supply Operations Director @ Fretadão

5d

Maaan hahaha just read all comments here and laughed a lot hahahaha but yes I think that wise and MP should be something pretty nice for customers. Also, did you see that Brazil Central Bank accepted the acquisition of Sim;Paul by Binance?

Linas Beliūnas, strategic partnerships like Morgan Stanley and Wise signal a pivotal shift in traditional banking's approach to fintech innovation. 2Point0 🔄

Julian Borsani

Building and scaling Web3 ventures | Fundraising & Advisory

5d

Sounds like a packed week. Morgan Stanley and Wise teaming up could shake things up in payments. What’s your take on it?

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