Issue #102: Mastercard Launches A Subscription Management Tool, ASIC Losses Case Against Finder Wallet, And NatWest Gives Up On BNPL
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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.
📣 The News Grab Bag
⤷ Mastercard launches open banking-powered subscription management tool
Mastercard has launched Smart Subscriptions, an open banking-powered subscription management tool that banks can integrate into their apps. The tool connects multiple accounts into one hub, allowing users to cancel, pause, and resume their subscriptions. Users also receive individual spend analysis, expenditure categorisation, and personalised offers.
The system is being piloted in the US and is expected to arrive in other countries this year. The tool is aimed at increasing loyalty and engagement and reducing chargebacks for banks while providing a simple and seamless way for users to manage their recurring subscriptions.
🥡 Takeaway: “More product!” That’s what I imagine senior management at the card scheme are saying to their teams as they continue to look for ways to diversify their revenue streams.
Obviously, this isn’t a new strategy for the schemes as they continue to look for ways to grow that are not purely tied to retail card usage and e-commerce. As I’ve noted in previous issues of FR, the days of just relying on the adoption of cards in net new markets and the growing e-comm penetrations are starting to flatten out as revenue drivers for the card schemes. Don’t get me wrong; the schemes are still dining out on the general shift from IRL to URL commerce and rising card usage as travel comes back in a big way, but the writing is on the wall that this isn’t going to be where the dollars are going to roll in from.
A question I’ve always had around these types of “revenue expanding” products that are less tied to payments — and, in this case, designed to reduce payment volumes — is how material they can be for a card scheme.
As a point of comparison, cross-border product expansion makes a ton of sense for the schemes, as does chasing stablecoin opportunities or developing an A2A payments product. These are bets on where there is a lot of headroom to grow (cross-border payments) and where the market is headed (stablecoins and A2A payments) and, more importantly, could be significant disruptors(/opportunities) for the schemes.
I hate to say it, but my guess is that this product gets little traction and ends up being scuttled — similar to what they recently did to CipherTrace.
⤷ US neobank Oxygen switches focus from banking to health in new strategy
US neobank Oxygen has decided to suspend its banking services to focus on health-related solutions temporarily. Customers have been informed about the closure process, and any remaining balances will be returned by check. The company will no longer accept deposits and will discontinue services related to its Oxygen Savings Account.
Oxygen plans to launch Oxygen Health, a health-oriented product that integrates health and financial solutions for its customers. This strategic shift comes as the company seeks to redefine its role and provide increased value to its customer base in light of industry changes.
Source: Oxygen Twitter account
🥡 Takeaway: Well, this sure does sound like a pivot. A big (and brave) one at that. Moving into the health (insurance?) segment and temporarily discontinuing their banking product sure does signal a burning of the ships.
What’s unclear is what prompted the shift specifically to this new segment. It seems their pure-play neobank product wasn’t generating sufficient interest for them to retain it as an offering. But why “health-related” solutions? Don’t get me wrong; I think the space is ripe for disruption in the US (and most markets, for that matter), but it does seem like a random move from Oxygen.
It’ll be fascinating to see how this goes and whether the “only temporarily pausing Oxygen Banking” does remain temporary or whether they go deep on health-related products. Good luck, Oxygen!
⤷ Finder Wallet wins landmark case against ASIC, proving its crypto investment product legal
Finder Wallet has won a landmark case against the Australian Securities and Investments Commission (ASIC) over its cryptocurrency investment product, Finder Earn. The Federal Court of Australia dismissed ASIC's allegations that Finder Wallet had breached financial services law by offering the product without holding an Australian Financial Services Licence.
🥡 Takeaway: A few weeks back, I discussed a trio of cases being pursued by Australia’s financial services regulator, ASIC, against companies who’d offered crypto-based products. The cases signalled a more litigious approach by ASIC in testing the edges of Australia’s financial services law as applied to novel crypto-based offerings.
The Finder Earn case is the last in the trilogy and, in combination with the other two cases (Block Earner and BPS Financial), paints some new (brighter) lines around the types of products a crypto startup can offer.
In what might end up being an unexpected boost to the local crypto ecosystem, the Finder and Block Earner cases might provide the legal clarity that startups need to start offering more nuanced (and, importantly, compliant) crypto-railed products to the broader public. Fingers crossed, this is the start of a mini-renaissance in Aussie crypto.
For a more detailed breakdown of the case, check out this summary from Aussie law firm, Hall & Willcox.
⤷ NatWest to End BNPL Option Due to Lower-Than-Expected Use
NatWest has discontinued its BNPL product due to lower-than-expected usage since its launch in 2022. Instead, the bank plans to focus on core lending products like credit cards, overdrafts, and loans. Customers with active BNPL plans will be notified of the service shutdown, and credit card instalment plans will be offered as an alternative.
🥡 Takeaway: In 2022, when NatWest launched its BNPL offering, many thought BNPL would end up being a feature, not a product. Pundits thought players like Klarna and Afterpay would soon be overtaken by the banks who’d drop this feature into their banking app and leverage their existing customer base to overtake them.
Fast-forward to 2024, and we’re starting to see the opposite play out. Few (if any?) established financial services players have been able to generate real traction with a BNPL “feature”. It turns out that just haphazardly dumping a BNPL option amongst your other products doesn’t work. In other words, distribution isn’t as big of an advantage as you think when it comes to BNPL.
NatWest giving up on their offering due to a lack of usage, while BNPL usage in the UK continues to climb, is symbolic of how most larger FS players have struggled to make it work in their product mix.
In many ways, this will become an important year for the BNPL segment as we likely see Klarna go public and regulatory changes to the sector in various markets. My guess is that we’ll see the continued rise of the focused BNPL companies as everyone else (mainly banks) give up on competing.
⤷ UPI is now live for cross-border transactions between India and Nepal
NPCI International Payments Ltd (NIPL) and Fonepay Payment Service Ltd have launched the Unified Payment Interface (UPI) for cross-border transactions between India and Nepal. This allows for QR-code-based UPI transactions between the two countries. Indian consumers can now make UPI payments at various business stores in Nepal.
🥡 Takeaway: In many ways, it feels like this is a battleground that few are talking about and, surprisingly, one that is being undervalued by many national faster payment networks. Being the rails that move money globally is powerful, and starting across high-growth regions like the subcontinent and Asia will, I think, prove to be a clever move.
UPI has been making waves with its continued growth in the region, and partnerships with plays like this could be a clever way to “export” UPI into new markets.
Watch this space; the growth of faster payment networks like UPI outside their home market is a trend worth monitoring in 2024.
💸 Notable Funding Announcements
Last week was slower for fintech financing, with 64 funding rounds completed and companies collectively securing $780m in investment.
⤷ ‘Banking-as-a-Service’ startup Griffin raises $24M as it attains full banking license
Griffin Bank, based in the UK, has raised $24m in an extended Series A funding round led by MassMutual Ventures, NordicNinja, and Breega, with participation from existing investors Notion Capital and EQT Ventures.
Griffin is an API-driven banking-as-a-service platform that recently obtained a full banking license. This license allows it to offer banking, payments, and wealth solutions via automated compliance and an integrated ledger.
Griffin will offer accounts for holding client money, savings accounts, and safeguarding accounts to other businesses that want to provide embedded financial solutions. With about $52m raised since its founding in 2017, Griffin's founders believe that the banking-as-a-service space is ripe for growth.
🥡 Takeaway: BaaS continues to run hot despite the regulatory challenges many players in the US have recently faced. In some ways, Griffin's approach feels like one we’ll see more players adopt as they look to directly interface with the financial system's bare metal in their home market.
Whether it’s more tightly controlling the compliance program that we’ve seen some BaaS partner banks struggle with or building a solution that actually works for the BaaS provider and its end customer, this feels like what we’ll see more of in the coming years.
⤷ Teachers’ Venture Growth mints new unicorn in Indian fintech Perfios
Teachers’ Venture Growth, the investment arm of Ontario Teachers’ Pension Plan, is injecting $80m into Perfios, an Indian fintech specialising in real-time credit underwriting for banks.
Operating in multiple markets, Perfios provides data tools for financial institutions to enhance customer processes and decision-making, supporting institutions like HDFC and Kotak Bank.
Perfios, valued at over $1b post-investment, plans to use the funds to expand globally and consider acquisitions. According to the article, it intends to go public next year.
🥡 Takeaway: Companies like Perfios are a great reminder that the world of fintech extends well beyond the US, UK, and EU. As the article notes, this 15-year-old fintech provider to banks “…generated a revenue of $49.1 million in the financial year ending March last year,” which isn’t too shabby for a B2B player focused on the subcontinent.
It turns out banks worldwide have problems ingesting, synthesising, and then actioning data — regardless of whether they’re in Mumbai or Minnesota. In high-growth markets (where there is still space to run) like India, this type of play makes a ton of sense as banks also look to modernise their data stack.
🎧 Resources & Recommendations
⤷ The Fintech OG Series: Max Levchin and Jackie Reses The This Week in Fintech Podcast
On this episode of the excellent Fintech OG series, Max Levchin, Co-Founder of PayPal and Affirm, and Jackie Reses, former Square executive and Lead Bank CEO, discuss their fintech journeys, including early struggles building a fintech startup. They also share insights on future fintech innovations. This is another episode from the Fintech OG team that is well worth listening to.
⤷ How Mercury's CEO Immad Akhund Changed the Startup Banking Experience And Got Into Investing
Immad Akhund, the CEO of Mercury, shares the story of how he created a beloved neobank for startups, despite initially receiving mixed opinions about the concept from potential customers. It’s a fascinating conversation about how sometimes you just need to back your belief in the need for a new product.
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