Issue #111: Visa Drops A Bunch Of New Products, Klarna's Staff 🤝 AI, And Ant Group Is Doubling Down On International Expansion
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A curated round-up of the most interesting and relevant news from the world of fintech. In each issue, I focus on what caught my eye from the previous week — so don’t expect a weekly smorgasbord of press releases and partnership announcements. The aim is to serve the meaty bits in a neat, nibble-worthy package. It's all about spotlighting the head-turners and giving you the nitty-gritty without the fluff.
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As always, it’s been a busy week for fintech, so without further ado, let's delve into the major happenings from last week.
⤷ 90% of Klarna staff are using AI daily - game changer for productivity
🏃♂️ The Rundown: Klarna last week announced that 9 out of 10 of its employees are now utilising generative AI daily, driven by Kiki, the company’s internal AI assistant.
According to the press release, non-technical teams lead in adoption: Communications (93%), Marketing (88%), and Legal (86%). Kiki, launched in June 2023, handles 2,000 queries daily and has answered over 250,000 questions, enhancing productivity and reducing administrative tasks. Key internal applications include sentiment analysis in Communications and contract drafting in Legal teams, showcasing AI’s versatility across functions.
🥡 Takeaway: Where will the killer use cases for AI come from in fintech? So far, it’s been a bunch of customer service bots and internal workflow enhancement tooling — which is how I’d classify this one from Klarna. In other words, there are no ‘Her’ moments for fintech yet (well, maybe that's for the better).
The reality is that much of the financial services experience is deterministic — make a trade, provide a balance, send money, etc. Sure, there’s a need for machine learning. The ability to use one’s data to, for example, better underwrite a risk is one that’s been utilised machine learning for a fair while now. But LLMs (and the name probably hints at why) haven’t found a “killer use case” in the industry.
To be fair, process improvement is nothing to scoff at. Bringing down the cost to serve for a consumer fintech is nothing to scoff at. Whether it is the ability of employees at Klarna to summon their internal Clippy or engineers using Co-Pilot to speed up menial coding tasks, these all roll up into decreasing costs and increasing a company’s velocity. Which is super valuable. But it’s unclear what that killer use case for AI will be in fintech, or maybe it’s just Clippys all the way down.
⤷ Changes from Visa mean Americans will carry fewer physical credit, debit cards in their wallets
🏃♂️ The Rundown: Last week, Visa unveiled a suite of new digital-first products set to roll out over the coming year, aiming to “revolutionise” payments for businesses, merchants, and consumers. New offerings include Visa Flexible Credentials for customisable payment methods and Tap features for enhanced security on mobile devices.
Additionally, Visa introduced the Payment Passkey for biometric authentication and Pay By Bank for account-to-account payments, utilising Tink’s technology. The company also plans to introduce data tokens for secure data sharing between consumers and merchants.
🥡 Takeaway: In a week when other tech companies were holding AI product events, Visa made its own announcements at Visa Payment Forum—and (thankfully) they weren’t AI-related.
Of all the things announced, the one that got the most attention was the Visa flexible credential. In their own words:
The Visa Flexible Credential will allow a single card product to toggle between payment methods, putting the power of choice in the hands of the consumer.
In other words, the humble “card” moves from omnichannel to multichannel. Yep, you’ll be able to select BNPL, credit card, debit or even loyalty points at the point of checkout, in a bank app, or even based on a rule set.
As I’ve said in previous issues, the schemes are beyond the point of hoping for organic growth from new markets and the e-commerce tailwind continuing in perpetuity. The schemes, more so than ever, are trying to build the future of payments and thinking more multimodally than in the past. Whether it’s pay by bank (which they also had an announcement about) or expanding “tap to pay” to more devices, Visa is looking at a world where payments are even more dispersed and ensuring it isn’t left holding the
bagcard.
⤷ Bunq launches beefed-up AI chatbot 0.2 and confirms re-applying for US banking licence after withdrawal
🏃♂️ The Rundown: Last week, Dutch challenger bank Bunq launched version 0.2 of its AI chatbot, Finn, enhancing its conversational capabilities. The article notes that the chatbot utilises generative AI to offer financial insights, answering over 100,000 questions with improved speed and depth.
With over 11 million users and €7bn in deposits, Bunq confirms reapplication for a US banking license after a prior withdrawal. CEO and founder of Bunq, Ali Niknam, also noted they had reapplied for their EMI license in the UK, and they were “…hopeful Bunq will hear positive news on its license this year”.
🥡 Takeaway: Yes, another AI bot from a consumer fintech, but that’s not why I dropped this article into this week’s issue.
After all the tactical retreats from consumer fintech startups post-ZIRP from global expansion, we’re back! Bunq reigniting their ambitions in the US is telling and might be the canary in the coal mine.
It was always going to be the case that Monzo and Revolut would go at it again and head back across the pond. But when we see a Dutch challenger bank say they’re going for it again and no less via what sounds like trying to get a charter(?), we might be very back in consumer fintech.
⤷ China’s Ant Group doubles down on global expansion with cross-border payments offering Alipay+
🏃♂️ The Rundown: Chinese fintech giant Ant Group, part of Alibaba, is intensifying its global expansion through its Alipay+ platform, which connects local e-wallets to international mobile payment systems. Launched in 2020, Alipay+ now links 88 million merchants across 57 countries to 1.5 billion consumer accounts.
The article notes that Ant Group sees Europe, the Middle East, and Latin America as key growth markets. Recent strategic investments include Singapore’s 2C2P (2022) and South Korea’s Kakao Pay (2017). Beyond these strategic investments, the company is also enhancing interoperability with partners like SGQR and DuitNow QR.
🥡 Takeaway: It was not all that long ago that the Chinese fintech sector was the toast of the industry, pioneering the super-app and showing what fintech looked like at scale. For a brief moment, it felt like China was the market to watch.
But in the last few years, it feels like they’ve gone quiet… very quiet. Obviously, the segment has faced a range of challenges in China, some internal and some macro.
So it’s interesting to see Ant Group call out their global expansion plans, which feels like putting the industry on notice that they’re back at it after a rough few years post-regulatory action in China.
It’ll be fascinating to see if this signals their next big push into the West.
⤷ Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK
🏃♂️ The Rundown: Ember, a UK startup focusing on embedded tax services, has partnered with HSBC UK. The collaboration allows HSBC's business customers to access Ember's automated accounting services directly from their online accounts.
Ember's platform categorises transactions, tracks expenses, generates invoices and offers tax insights. With upcoming regulatory changes in the UK mandating digital tax filing by 2026, Ember's solution targets small businesses to help with the process.
The startup recently secured a £5m funding round from Valar Ventures, Viola Fintech, and Shapers.
🥡 Takeaway: In previous issues, I’ve discussed the looming battleground for embedded fintech—specifically, whether the SaaS or fintech native approach wins.
For context, we are seeing embedding happen at both the SaaS tooling and the fintech native level. Using business chequing accounts as an example, on one end, we have the accounting platform more aggressively looking at how they can offer more financial tooling for their customers. On the other hand, banks, in this case, HSBC, are looking to encroach on the accounting platform space by offering embedded tax services. In the short term, these are distinct, but the collision course is being set.
It’s not unique to the chequing account; the same is happening across various other vertical SaaS segments. For example, HR and procurement are seeing the same battle emerge. The SaaS vs. fintech embedding battle lines are being drawn, and it’ll be interesting to see who comes out on top.
⤷ Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases
🏃♂️ The Rundown: Kudos, an AI-driven smart wallet startup co-founded by Tikue Anazodo and Ahmad Ismail, has raised $10.2m in a Series A funding round led by QED Investors. Other notable investors in the round include Patron, The Points Guy's Brian Kelly, and Samsung Next.
The company, which optimises credit card rewards and offers personalised financial advice around optimising rewards and utilising credit effectively, has grown from 1,000 beta testers in 2022 to 200,000 registered users, with over $200m in annualised checkout gross merchandise volume.
🥡 Takeaway: It seems obvious that every wallet product should offer this feature. On the face of it, “smart routing” seems like a feature that every consumer wallet product should offer, specifically companies like Venmo and Paypal.
Having said this, the tension between offering their own card (and thus skimming sweet, sweet interchange) is just too high in the US market, and that’s why you don’t see too many pushing into this space, which creates an opening for startups like Kudos.
It’s also an interesting contrast to what Visa announced this week with their Flexible Credential product. Presumably, given the bank is their customer, Visa will allow switching between cards and other payment offerings (i.e. BNPL) of the issuer — meaning optimisation will be limited to their ecosystem of offerings.
When it comes to Kudos, I’m fascinated to see if they can make a go of it on referral revenues alone — which seems to be their current monetisation strategy — or whether they also jump into offering their own card or maybe even charging their customers directly. Incentives are hard to overcome in the wallet segment, but good luck to them because it’s undoubtedly a product that should exist.
⤷ Paytech start-up Aeropay raises $20m Series B for platform and partnership development
🏃♂️ The Rundown: Aeropay, a Chicago-based paytech start-up, has secured $20m in Series B funding led by Group 11, with support from Chicago Ventures and Continental Investment Partners.
The funding aims to enhance product offerings, strengthen strategic partnerships, and explore new opportunities, with a focus on sectors like financial services and quick-service restaurants. In Q4, the company saw 10x revenue growth and achieved cash-flow profitability.
Aeropay introduced Aerosync, a bank aggregator, to its API-driven platform for account-to-account payments. CEO Daniel Muller notes in the article that he envisions building a next-generation payments network to reduce fraud risks and simplify payments.
🥡 Takeaway: A2A payments are having a moment. The long-tail opportunity to disrupt the schemes feels far off, but most players in this space are leaning toward the upside of reducing merchant fees—which feels like the killer value proposition.
Now that A2A is in the zeitgeist, what’ll be interesting to see is who is going to come out on top and what the market wedge will be.
Will it be an online-focused payment processor like Stripe or a newer player like Aeropay, or will we see a more focused effort from those in the POS terminal space (i.e. Square) to get things moving for the segment?
I think it’ll be market-dependent (i.e. is it a market where A2A is supported via faster payments like it is in Australia or the UK) and whether the incentives align enough for customers to start to adopt it — so expect a slow uptake in the US.
⤷ The Fintech OG Series: Charley Ma and Reshma Sohoni
If you’re an FR regular, you’ll know The Week in Fintech podcast is a reasonably regular recommendation from me. This is another excellent episode with Charley Ma and Reshma Sohoni, who chat about their careers in the industry and where they see fintech heading next. Add it to your podcast playlist for this week.
⤷ Why Are Cross-Border Payments So Hard?
The Flip has been dropping some bangers recently and this is no exception. As someone who worked on cross border payments in Africa, this episode hits a lot of the notes on why building money movement products on the continent is so hard. Both Benjamin Fernandes and Dan Kleinbaum drop some really awesome insights into a market that remains a hotbed of fintech activity.
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