Issue #131:HSBC’s Embedded Finance Bet, Starling’s £29M Fine, and Mastercard’s Latest Acquisition

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Some previous issues you might want to check out if you’re new include “A Deep Dive Into The Cash App's Growth Machine”, “The Future Of Payment Initiation”, and “Current: Doing It Differently”.

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HSBC launches embedded finance venture, Finexta

🏃‍♂️ The Rundown: HSBC has launched SemFi, a joint venture with Tradeshift, to provide embedded finance solutions for businesses, beginning in the UK. The venture will offer SME suppliers access to digital invoice financing and enhanced spend management through HSBC's virtual card solutions, integrating financial services within e-commerce platforms.

🥡 Takeaway: You know embedded fintech is hot when a bank jumps in. Well, maybe lukewarm is more accurate, considering most embedded players' struggles over the past year.

But in all seriousness, HSBC's entry into embedded fintech (even through a partnership) is a move I didn’t see coming. I thought that wave had passed. Those who’ve been in fintech long enough will recall the first wave of incumbent banks (like Santander) trying to build platforms for embedded offerings.

This seems like a more nuanced play, with a sharper focus on a targeted B2B segment. As we all know, when the rubber hits the road, banks tend to either go too far out on the risk curve (see, for example, the partner bank issues that have been grabbing headlines recently) or play it too safe. It’ll be interesting to see if this partnered approach gives HSBC the “buffer” it needs to find the right balance.

Starling Bank fined £29m for financial crime failings, Reuters

🏃‍♂️ The Rundown: Starling Bank has been fined £29m by the Financial Conduct Authority for failing to maintain adequate anti-money laundering controls and sanctions screening systems, allowing the opening of over 54,000 accounts for high-risk customers since 2021.

🥡 Takeaway: Ouch. While it’s not as hefty as some of the fines we’ve seen previously for banks (nowhere near HSBC’s $1.9b fine back in 2012), it’s definitely not the kind of news Starling Bank wanted—especially with an IPO reportedly on the horizon.

As I’ve pointed out in past issues of FR, running a compliance program with zero failures is nearly impossible—as proven by the fact that almost every major bank globally has been fined at some point.

As the fintech space matures, regulators are keeping a close eye (more so than ever!), and this fine is a reminder that even the most innovative players aren’t immune to compliance challenges.

Facebook owner Meta forms data-sharing pact with UK banks to counter scams, CNBC

🏃‍♂️ The Rundown: Meta is collaborating with two major UK banks, NatWest and Metro Bank, to establish an information-sharing agreement aimed at combating fraud. The initiative, part of Meta's Fraud Intelligence Reciprocal Exchange (FIRE), has already enabled the removal of 20,000 scam accounts linked to concert ticket fraud.

🥡 Takeaway: This is an interesting move from Meta. One angle here could be the growing pressure from new scam reimbursement laws that require companies to be more vigilant about fraudulent transactions. For instance, new UK legislation requires customers to be reimbursed up to £85,000 within five days, with liability shared between sending and receiving PSPs.

Although Meta isn’t directly impacted by these regulations, as a platform where scammers frequently operate, it’s likely taking action to avoid getting caught in the legislative crossfire or risk having PSPs cut off transactions on its platforms. On the flip side, banks probably view this as an opportunity to collect fresh transaction data at the source.

This move upstream into fraud detection is worth watching, as it could signal a broader shift in how companies are positioning themselves in the fight against fraud.

Mastercard to buy Minna Technologies, Payments Drive

🏃‍♂️ The Rundown: Mastercard has announced its acquisition of Minna Technologies, a Swedish company specialising in subscription management. The acquisition aims to create a central hub for customers to manage their subscriptions and enhance their experience.

🥡 Takeaway: It’s been a busy few months for Mastercard’s corporate development team. You might remember their $2.65b acquisition of threat intelligence firm Recorded Future last month, and now they’ve snapped up Mina.

So, what’s the strategy here?

As I’ve noted in previous FR issues, card schemes are diving deeper into adjacent markets as they hunt for new revenue streams. The days of coasting on rising online transactions and the global shift to digital payments are behind them.

Like the Recorded Future deal, this acquisition adds another product to the Mastercard sales toolkit, driving that sweet expansion revenue. Kaching, upsell!

The real question is: how far will Mastercard go beyond its core? Is this the edge, or will they keep exploring more adjacencies? My bet is there’s still a lot more to explore before the public markets push them back to their core business.

Bud Financial launches agentic banking tool to revolutionise consumer finance management, Fintech Global

🏃‍♂️ The Rundown: Bud Financial has launched an agentic banking tool to help consumers optimise their finances, enabling automated management of accounts and preventing overdraft fees.

🥡 Takeaway: One of my long-standing beliefs is that every Open Banking startup is a payments company—they just don’t know it yet. Simply selling access to data pipes isn’t a sustainable model (at least for venture-backed companies), especially in regulatory-driven Open Banking markets. Many have already pivoted toward the A2A/pay-by-bank space to ride that wave.

Now, GenAI seems to be opening up a new monetisation path for Open Banking players. It’ll be interesting to see whether data providers or data ingestion platforms end up serving the GenAI needs of companies. My guess? It’s the latter.

Payment unicorn Zepz raises $267 million from World Bank, Accel and TCV, Techcabal

🏃‍♂️ The Rundown: Zepz, the parent company of World Remit and Sendwave, has raised $267m from investors, including Accel and the International Financial Corporation, aiming to expand its operations across Africa, where it currently serves over 150 countries.

🥡 Takeaway: Cross-border money movement in Africa is big business. Traditionally, most have viewed it as a “north-south” opportunity (~$100b in 2022); the real growth is happening in intra-Africa transfers, currently valued at ~$20b.

This massive round likely relieves some pressure on Zepz after it paused its IPO plans and made significant layoffs in 2023. With two strong brands, WorldRemit and Sendwave, it’ll be interesting to see how they continue to scale in a market that’s only getting more competitive but also price-sensitive.

Rogo, an AI startup focused on finance, raised its $18.5 million Series A, Yahoo Finance

🏃‍♂️ The Rundown: Rogo last week announced that it raised $18.5m Series A round led by Khosla Ventures to develop an AI platform for finance that aims to streamline workflows and reduce overwork for junior bankers.

🥡 Takeaway: The AI co-pilot trend is still running hot, and Rogo is targeting Wall Street analysts. The “GitHub co-pilot for X” model continues to dominate fintech products, and Rogo’s AI promises to take care of the grunt work so analysts can focus on the real value-add.

But Rogo isn’t playing in an empty field. Banks are jumping in, too. JPMorgan recently launched its own AI-powered research analyst chatbot, signalling that the big players are ramping up their AI efforts. Bloomberg has also rolled out its first generative AI tool on the Bloomberg Terminal, aiming to automate research tasks and further tighten its grip on the analyst workflow. With established players entering the fray, the competition to stand out (especially for a startup) in this space is becoming increasingly fierce.

The Fintech OG Series Season Two: Jason Gardner and Ken Lin, The Week In Fintech

In this episode of the excellent This Week in Fintech podcast, Jason Gardner and Ken Lin explore the highs and lows of building Marqeta and Credit Karma. They discuss overcoming regulatory hurdles, navigating industry challenges, and forming unexpected partnerships that helped shape their companies. As always, the podcast is well worth a listen.

10 Years of Atom Bank with Mark Mullens, 11FS

In this episode of Fintech Insider Insights, Kate Moody chats with Mark Mullen, CEO and Co-Founder of Atom Bank, one of Britain’s OG neobanks. Launched in 2016, Atom recently reported an impressive £27M operating profit. Mark dives into building a trusted brand, the bank’s future plans, and their famous 4-day work week. A must-listen for your podcast lineup this week!

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