Blackbox Weekly
Your regular dose of fintech news, views and insights
Why Banks Might Want to Worry That Exchanging Currencies At Check-Out Is Getting Easier
Upstarts like international money transfer service TransferWise and UK challenger bank Revolut are reducing the friction of living and working abroad — and consequently eating into the profits of legacy financial institutions in the process.
Fintech Around The Web
- Goldman Sachs Is Acquiring Consumer-facing Fintechs At Rapid Clip
Goldman Sachs is taking on retail bankers for the general population — without a physical presence. The bank is aiming to create one online platform where consumers can monitor their savings and investments as well as take out and repay loans. The investment bank bought credit card startup Final at the end of January and is reportedly in talks to buy personal finance startup Clarity. Goldman Sachs first stepped into retail banking with online personal loans in 2016 with Marcus, which reached “$1 billion in loan originations in just eight months — faster than any of its competitors.”
2. Personal Finance Lending Platform SoFi Posts Disappointing Earnings
It looks like SoFi’s bet on high-earning individuals — i.e. recent grads with good jobs but not much in the way of savings or wealth — isn’t yet paying out like expected. According to the Wall Street Journal, “customers of online lender Social Finance Inc. are missing their loan payments at an unexpectedly high rate”. Founded in 2011, the personal refinancing startup had originated $25 billion loans as of last October, but it also missed its lofty goal for 2017 of $17.5 billion in loans by 26 percent and pulled back from plans to expand internationally. For SoFi, 2017 highlights how little room for error fintechs have, especially compared to the legacy institutions when they step into the digital ring.
3. In Europe, Consumers Can Already Price Compare Bank Accounts
One Germany-based fintech is making changing bank accounts for European consumers as easy as it is to shop for flights or hotel rooms on price comparison sites like Kayak. The startup Raisin, which allows users to transfer their accounts between banks in 31 different countries, has attracted more than $6.2 billion in assets since its launch in 2013. If technology like this spreads and consumers adopt it, it has the potential to force traditional banks to offer more competitive interest rates and services.
4. Airbnb’s Hedge Fund
Airbnb’s recently departed chief financial officer was reportedly running a hedge fund within the company’s finance department. During his tenure at Airbnb, Laurence Tosi said Bloomberg bought “stocks, currencies and fixed-income securities, mimicking the treasury fund he ran at Blackstone.” Revenue from this hedge fund amounted to 30 percent of the company’s cash flow in 2017, resulting in a $5 million profit a month for the home rental and sharing platform. This news reflects the ability and interest of companies from any industry to lift practices traditionally left to the banks and generate a similar profit for themselves. Just look at AirAsia’s money exchange endeavor or Amazon’s line of credit.
5. WhatsApp has launched person-to-person payments into beta in India
WhatsApp is currently beta testing a payments feature among some users in India, allowing them to send money between users, not including merchant accounts. Social and messaging platforms, like Snapchat, Facebook Messenger and now WhatsApp are increasingly leveraging their pervasiveness as platforms to step into payments. Consumers in China, especially, have been accustomed to using social media platform WeChat as a way to make payments to merchants for years. It will be interesting to see how banks and fintechs in the space will survive when sending social platforms are making payments as easy as opening a chat dialogue.
6. This Digital Publisher is Turning to Cryptocurrency Mining to Bump Revenue
You’re surely familiar with the pop-ups on digital media websites asking you to either disable your ad-blocker or subscribe to their publication to get a glimpse of the content. As of this week, Salon has an alternative for users — allow the digital publisher to leverage your device’s unused processing power to mine cryptocurrency. In this case, Salon will mine the privacy cryptocurrency Monero. It’s certainly an interesting twist to the saga of digital publishers looking to make their businesses more profitable.
