All The Fintech — Sept 17th, 2017
Happy Sunday and welcome to the first news digest of All the Fintech :).
For those of you that don’t know me, I currently work at Plaid where a large part of my job is keeping up to date with all the various developments that occur across financial technology (or fintech for short). I have a pretty broad interpretation of what falls under fintech, but in general I like to broadly define fintech as technology that’s used and applied in the financial services industry. Whether that technology is leveraged internally at a large financial institution, or utilized to compete with existing financial institutions, I consider it all to be relevant!
For now, this newsletter will be a somewhat curated selection of articles, viewpoints, and news snippets that I believe offer a pulse on what’s happening in fintechland week by week. I’m going to aim for once a week, but welcome any and all feedback (and article/website recommendations) as I start out here. I’ll try and add my own commentary here and there and as always, caveat that this is mostly dominated by what I find come across and think is interesting. Without further ado…
Top news 💯 -
SoFi’s CEO Steps Down as Sexual Harassment Claims Damage Morale
The chief executive officer of Social Finance Inc. is stepping down before the end of the year amid sexual harassment accusations leveled at one of the most valuable financial technology startups.
The accusations are pretty awful :/.
All the Fintech 📆 -
Cryptocurrency 🤑 — I spent the week reading a bunch of articles on crypto so this week’s newsletter is a bit crypto heavy…I’m also including “blockchain” stories in this section whatever that means.
China’s Bitcoin Exchanges Receive Shutdown Orders and Closure Timeline
Aka why the crypto market took a dive last week. Chinese Government continuing to clamp down on money leaving the mainland.
Kik could pave the way for more mainstream tech company ICOs
Kik the chat app just did a big ICO for their coin, Kin. The question on a lot of people’s minds: should I do an Initial Coin Offering? (probably not)
Jamie Dimon Slams Bitcoin as a ‘Fraud’
It’s a good option for murderers, drug dealers.
I hope this doesn’t mean that one of these will happen in the future to all those people who buy bitcoin…
The Pirate Bay Website Runs a Cryptocurrency Miner
A few hours ago a cryptocurrency miner appeared on The Pirate Bay website, using the computer resources of visitors to mine Monero coins. The operators of The Pirate Bay are testing it as a new way to generate revenue, but many users aren’t happy.
If you’re not paying for the production, you are the product. Or your computer is paying for it, in which in that case please go ahead.
Is There a Cryptocurrency Bubble? Just Ask Doge.
Jackson Palmer no longer thinks it’s funny to imitate Doge, the internet meme about a Shiba Inu dog whose awe-struck expressions and garbled syntax (e.g. “Wow. So pizza. Much delicious.”) made him a viral sensation several years ago. Very bubble. Much scam. So avoid.
Yes, 99% of the ICO’s being launched today are probably scams. Hodl. I do like the description of an ICO compared to buying chips at an imaginary casino in this one.
Bitcoin in the Browser: Google, Apple and More Adopting Crypto-Compatible API
Announced on Thursday, the API is currently being implemented in browsers including Google’s Chrome, Microsoft’s Edge, Apple’s Webkit, Mozilla’s Firefox, the Samsung Internet Browser and Facebook’s in-app browser. When activated, the Payment Request API will allow new payment types, including bitcoin, ether any any other available cryptocurrency (as well as more traditional online payment methods) to be stored directly in the browser.
Bitcoin is a scam! A scam that a lot of the smartest people across the world are working together on!
Lending — What’s a good emoji for lending? Thoughts greatly appreciated. As expected, Equifax breach + SoFi is extremely top of mind still, but looks like GS is (slowly?) making moves as more digital lenders falter (see exits section).
SPUZ : Equifax Breached
From what we’ve analyzed, Equifax should be blamed for the entirety of the entire data breach…The amount of data that is out in the open right now on all these Equifax consumers is mind blowing. An agency, that’s worth billions, deals with this volume of information, is allowed to be pwned by simple panel exploits.
Yikes.
Goldman Sachs (GS) thinks its fintech lending arm Marcus can make as much extra revenue as trading
Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years.
From what I know, cheap funding and distribution is critical with lending and GS does seem to have both.
Equifax Hack Could Slow Down Fast Loans
“The goal of digital lending in recent years has been to make credit decisions quickly, and cheaply. The Equifax data breach could force some lenders to hit the brakes.”
Fallout will continue for a looooong time from this one.
Goldman Sachs buys $300m of non-bank loans — AltFi Credit
Goldman Sachs Bank will purchase $300m in home solar loans originated by Mosaic, a US provider of home solar financing.
GS!!
CFPB Issues No-Action Letter To Upstart Network
The CFPB issued a no-action letter to Upstart Network, which provides online lending and uses alternative data to determine creditworthiness.
I’m not a lawyer so I don’t know how to read into this, but at least sounds promising that the CFPB is trying to understand alternative data sources in lending.
Payments 💳 — Google launching payments with P2P Clinkle in India and Venmo launching new features.
Google’s UPI-based Tez payments app for India is here
Google has launched Tez, a payments app designed for Android and iOS users in India to send money to each other, as well as pay for purchases at businesses that allow digital transactions. There’s also an interesting ‘Cash Mode’ feature that lets you pay and receive money with people near you, simply by using audio. Both users will need to have the Tez app installed — but they won’t need to share numbers or bank account details with other to make it happen
P2P Clinkle!!
Venmo is offering users an (ugly) physical debit card
Venmo is inviting some users to a beta program where they’ll be sent a card for free that is attached to their Venmo account. Users can pay with this card in stores and online just like a normal debit card — and the money spent will be debited from their Venmo balance.
“Venmo launches a debit card with a picture of dough” just didn’t sound as catchy I guess. For what it’s worth, I did find the piece of dough to be amusing on my card. Paypal making some interesting moves trying to create another payment rail through their viral P2P offering.
Wealth Management 💲- I promise I’ll add a couple more next week too…
Goldman and BlackRock portfolios available on Betterment — Business Insider
Betterment, the largest roboadviser with $10 billion under management, has enlisted the support of financial juggernauts Goldman Sachs and BlackRock for two new portfolio options.
GS really does seem to be every nowadays.
Fundraising 💵
RealtyShares, a San Francisco based online marketing for real estate investing, raises $28MM Series C led by Cross Creek Advisors with participation from existing investors including Union Square Ventures, General Catalyst Partners, and Menlo Ventures (link)
Braavo Capital, a New York based integrated financing platform for mobile app businesses, raises $70MM in debt and equity led by Mark 2 Capital (link)
Vemo Education, a Vienna, Va.-based provider of income share agreement solutions for postsecondary education institutions, has raised $7.4 million in seed funding. University Ventures and NextGen Venture Partners co-led the round, and were joined by Route 66 Ventures, Third Kind Venture Capital, Haystack Partners and Task Force X Capital. (company link)
Lenda, a San Francisco-based mortgage origination and refinancing platform, has raised $5.25 million in Series A funding. SF Capital Group led the round, and was joined by CreditEase Fintech Investment Fund and return backer Rubicon Venture Capital. (company link)
TNG Fintech, a Hong Kong based digital wallet platform, raises $115MM Series A led by NewMargin at US$565MM post-money valuation (link)
CashShield, a Singapore based payment fraud risk management platform, raises $5.5MM led by GGV Capital and joined by Nest co-founder Tony Fadell (link)
Red Doy Payment, a Singapore based payment gateway, raises $5.2MM Series B from GMO Venture Partners, Wavemaker Partners, Skype co-founder Toivo Annus, and MDI Ventures. (link)
Product Launches 🚀
New Credit Card Option for Those With Scant Credit Histories — The New York Times
A New York start-up aims to use everyday financial information to qualify people with scant or no credit histories for its credit cards.The company, called Petal, considers an applicant’s standard credit scores, when available. But it also analyzes their digital financial records, like checking accounts or, in some cases, prepaid debit cards, to rapidly assess their income and spending habits.
Exits 💸
Goldman Nabs Fintech Group in Push to Boost Online Lending — WSJ
Goldman Sachs Group Inc. is poaching about 20 employees from online small-business lender Bond Street Marketplace Inc. as the Wall Street giant embraces loans as a source of growth.
RIP Bond Street? :(
ZhongAn Online Sets Terms for Up to $1.5 Billion IPO — Bloomberg
ZhongAn Online P&C Insurance Co. has set tentative terms for a Hong Kong initial public offering that could raise as much as $1.5 billion as it pursues the city’s first major fintech listing.
Random 🔖
Linear Thinking in a Nonlinear World
Decades of research in cognitive psychology show that the human mind struggles to understand nonlinear relationships. Our brain wants to make simple straight lines. But in business there are many highly nonlinear relationships, and we need to recognize when they’re in play. This is true for generalists and specialists alike, because even experts who are aware of nonlinearity in their fields can fail to take it into account and default instead to relying on their gut. But when people do that, they often end up making poor decisions.
HT to Social Capital’s Snippets, this is my send-to-friends-to-seem-intelligent link of week.
With $600 Million ‘Blank Check’ IPO, VCs Experiment on Startup Listings
A $600 million initial public offering Thursday hopes to test one venture capitalist’s theory that leaving the details of a listing to others will provide a smoother path to public markets for venture-backed companies. Social Capital Hedosophia Holdings Corp., a “blank check” company created by venture firms Social Capital and Hedosophia, priced 60 million shares Thursday at $10 a share. The stock rose as much as 4 percent on its first day of trading.
We’ll see how it goes this time around…
