The secret of successful bank/fintech partnerships, BNPL's 'dangerous illusion', digital payments are driving the future of transportation
In between DeFi and TradFi are some technologies and players to help bridge the two worlds. Tearsheet’s Bankchain Guide looks at the trends behind traditional FIs adopting new blockchain technology in 2022. Download the guide (free) - Zack Miller, editor
Our top stories this week
What’s the secret sauce of a successful bank/fintech partnership?
Fintechs initially came in the banking industry as a disruptive force, but now they are increasingly partnering with banks as the market becomes more competitive.
There are many moving parts in a bank/fintech collaboration, and a successful partnership requires effective communication among both parties.
Power of Payments Ep. 10: Digital payments and overspending, Revolut Reader, mobile wallets vs physical wallets, and more
This week, we discuss how digital payments make it easier for young consumers to overspend, and how the global microchip shortage is impacting the payments industry. We also talk about Revolut's first venture into in-store payments, as well as the growing level of consumer trust in mobile wallets.
Data Snack: Credit and debit cards are king; BNPL’s ‘dangerous illusion’ is fueling overspending
Credit and debit cards still dominate as payment methods, with 60% of consumers preferring either of the two. BNPL's ease of use leads to consumers feeling detached from their expenses, making financial education all the more important today.
Read more (exclusive for Outlier subscribers)
Digital payments are driving the future of transit
91% of riders expect contactless payment options to be a part of their public transit experience. 61% of riders said that having capped fares as an option for their rides would encourage them to take transit more often compared to traditional fare payment methods.
Read more (sponsored by Visa)
How changes in PPP affected funding for underserved SMBs, in 4 charts
Many small and medium sized businesses weren't able to access the first wave of the Paycheck Protection Program, and policymakers sought to solve this by making some changes to the program. Looking at the different outcomes for 2020 and 2021, analysis by the Federal Reserve found that some tweaks were beneficial, although there is no way to know for certain.
Data Minimization: The growing need to minimize consumer financial data, in 4 charts
87% of consumers think data minimization should be done but only 41% believe that it is happening. Consumer’s opinions stand united across party lines.
Read more (exclusive to Outlier members)
How has going public via a SPAC impacted MoneyLion?
MoneyLion's CEO, Dee Choubey on how being publicly listed has impacted the fintech and what ingredients are required to keep a customer-centric neobank platform on track. He further talks about what strategies worked best for MoneyLion and where are they headed.
Data Snack: Most consumers trust mobile wallets enough to leave their physical wallets at home
Mobile wallets and contactless payments continue to gain adoption even as the pandemic’s effects subside globally.
Most consumers in the US, UK, and Australia now trust mobile wallets enough to leave their physical wallets at home, according to a recent Marqeta report.
Read more (exclusive to Outlier members)
Read the charts
1. Lenders are offering higher rates of annual % yields on savings accounts than Wall Street banks
Source: Bloomberg
2. Crypto startup funding falls due to waning appetite for crypto
Source: Bloomberg
What we're reading
Big haircuts
Stripe cuts internal valuation by 28%
Stripe told employees in an email that the internal share price was about $29, compared with $40 in the previous internal valuation (WSJ)
Recommended by LinkedIn
85% valuation drop: Klarna confirms $800 million raise at $6.7 billion
It's official: Klarna's big $800 million round was done at a $6.7 billion valuation -- 85% down from the buy-now, pay-later firm's last round. The round included new and existing investors, including Sequoia, Silver Lake, and the UAE’s sovereign fund Mubadala Investment Company. (TechCrunch)
Stop doing that
Wall Street texting habit costs $1 billion in fines
Regulators are poised to extract about $1 billion in fines from the five biggest US investment banks – JPMorgan, Goldman Sachs, Morgan Stanley, BofA, and Citi – for failing to monitor employees using unauthorized messaging apps (Bloomberg)
CFPB penalizes BofA over alleged illicit account freezing
The Consumer Financial Protection Bureau has leveled a $100 million fine at Bank of America for allegedly messing up the disbursement of state unemployment benefits during the pandemic (PYMNTS)
Rough season for banks, fintechs
JPMorgan and Morgan Stanley profit miss puts a damper on Wall Street
JPMorgan Chase and Morgan Stanley reported a bigger-than-expected decline in second-quarter profits that signaled the end of the industry’s pandemic-era earnings boom (FT)
Celsius files for bankruptcy after liquidity crisis
Crypto lender Celsius Network has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York to enable a comprehensive restructuring plan that benefits all stakeholders (CoinDesk)
Fintech startups lead the layoff wave
As of July 1, some 3,709 fintech employees — excluding crypto companies — have been laid off across 41 “layoff events” in the second quarter of 2022, according to an analysis by Roger Lee of Layoffs.fyi. That's like 10% of all startup layoffs so far. (TechCrunch)
New products, partnerships, milestones
Plaid to embed crypto account data into its platform
Plaid is adding support for leading crypto exchanges to its data network -- while the firm previously integrated with large exchanges on an ad hoc basis, the move is an indication that the company sees crypto as important to its growth (TechCrunch)
Monzo aims to ramp up growth despite fintech downturn
The boss of UK digital bank Monzo said he’s targeting growth rather than immediate profit during a turbulent time for the fintech industry, after nearly doubling annual revenue while widening losses (Bloomberg)
Revolut hits 20 million users on its seventh anniversary
Champagne corks are popping at financial super app Revolut as it celebrates its seventh anniversary by surpassing 20 million retail customers worldwide, processing over 250 million transactions a month (Finextra)
Deutsche Bank is the latest to enter the BNPL space
Deutsche Bank has announced it's cooperating with Austria-based fintech Credi2 to develop a white-label BNPL product for online retailers and e-commerce marketplaces -- within Deutsche Bank, the lead management for the BNPL project lies with itsMerchant Solutions unit, its payment service division (The Paypers)
Blackhawk Network, Klarna partner on physical retail stores payments
Branded payments provider Blackhawk Network and Klarna have forged a new partnership that will make it easier for consumers to use Klarna’s interest-free payment offerings with brick-and-mortar merchants -- specifically, for BNPL at physical retailers in Blackhawk’s U.S. network ranging from grocery stores to electronics shops to beauty salons (Finovate)
Goldman hires senior Google executive for the new innovation group
Goldman Sachs is adding Alphabet’s Jared Cohen to help start a new innovation group with co-chief information officer George Lee -- this is the latest step GS has taken to inject a technology focus into the incumbent investment bank (CNBC)
Capital One Business to integrate Melio into B2B payments stack
Capital One Business has launched a fully integrated accounts payable solution with Melio, a leading B2B payments platform for small businesses -- this strategic partnership will enable Capital One small business cardholders to pay their vendors and suppliers with a card, even if they do not accept credit cards, directly from their Capital One Business account (Finextra)
US Treasury calls for public comment on digital asset policy, following Biden’s executive order
The US Department of the Treasury has requested comments from the public on the potential opportunities and risks of digital assets in compliance with President Joe Biden’s executive order from March -- input from the public will “inform its work” in reporting to the president on the possible implications of digital assets on the financial markets and payment infrastructure (Cointelegraph)
Santander to hold awards ceremony in metaverse
Santander will debut a global blockchain awards ceremony in Decentraland on July 14. The ceremony will also be streamed on YouTube. Viewers can get wearables of the event: a cap and a bracelet that will allow them to customize their Metaverse avatars. (Finextra)
GameStop’s NFT marketplace goes live
Video game retailer GameStop has launched an NFT marketplace. In May, it unveiled its digital asset wallet for storing, sending, and receiving crypto and NFTs ahead of the marketplace launch. Earlier this year, Coinbase launched an NFT marketplace and eBay NFT marketplace, KnownOrigin.(CoinDesk)
GoHenry expands into Europe with acquisition of French Pixpay
10 years after GoHenry launched a debit card for kids in the UK, the firm is expanding into Europe through an acquisition of Pixpay. GoHenry more than doubled its revenue during the pandemic, posting $42 million in 2021. (Fintech & Finance)
Wealth management booms as the rich get richer but markets get choppy
Wealth managers, like Schwab, Abrdn, and RBC, are positioning themselves to attract newer younger investors who are more interested in DIY investing after an inheritance. In the years to come, the wealth management industry is expected to grow 67 percent from $137 trillion in AUM last year to almost $230 trillion globally by 2030, according to Bain. (FT)
Stay ahead of the game with Outlier -- Tearsheet’s exclusive members-only content program and join the leading financial services and fintech innovators reading us every day.