Issue #110: Nubank Hits 100 Million Customers, FIS Jumps Into Embedded Finance, And Revolut Launches A Standalone Crypto Trading Platform
👋 Hi all, I hope you’ve had a great week.
A big shout-out to our loyal subscribers and a hearty welcome to the new faces — we're ecstatic to have you here!
If you’re new to Fintech Radar, this is what you can expect:
A curated round-up of the most 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.
Also, if you enjoy this issue, please share it with a friend. I’m sure they'll appreciate it!
As always, it’s been a busy week for fintech, so without further ado, let's delve into the major happenings from last week.
⤷ Nubank reaches 100 million customers across Latin America
🏃♂️ The Rundown: Brazilian neobank Nubank last week announced they’d achieved a significant milestone by reaching 100 million customers across Latin America, establishing itself as a formidable competitor to traditional banks in the region.
Nubank, boasting over $1 billion in net profit for 2023, continues to dominate the Brazilian market while expanding its presence in Colombia and Mexico. CEO David Velez emphasises the company's focus on market share growth and aggressive expansion in Mexico, targeting the country's digital banking market.
🥡 Takeaway: OK, we might not have expected the quirky video on the Las Vegas Sphere to celebrate, but Nubank hitting 100m customers has been on the cards for a while. In Q4 of last year, Nubank announced they’d reached 93.9m customers, so it was just a matter of time before they hit the 100m customer mark. It’s still wild to think that in a decade, they’ve gone from 0 - 100m customers, over $2b in revenue, and recently hit profitability.
One of the more fascinating fintech narratives this year comes from the challenger bank segment. After years of funding coming in thick and fast, the segment took a beating as the ZIRP bubble burst. The narrative shifted from “This is a huge opportunity… financial services is a massive market… incumbents are lazy” to “Nah, it’s actually too hard to topple the incumbents”.
The idea that you could build a profitable, fast-growing challenger bank had lost flavour with VCs and public markets alike. Yet here we are in 2024 with several globally focused neo-banks doing both.
The neo-banks who have stuck to their knitting and focused on building a cost-effective way to serve customers in segments that banks have traditionally underserved are beginning to see (some) light at the end of the tunnel. Whether it’s venture capital reentering the market or investors returning to stocks in the segment, the vibe shift feels real, and I think it's one of the narrative shifts we’ll be talking about at the end of 2024.
⤷ FIS Launches Embedded Finance Platform for Financial Institutions and Businesses
🏃♂️ The Rundown: FIS introduced the “Atelio by FIS" embedded finance platform last week, which enables various financial services for financial institutions, businesses, and developers.
In the announcement, FIS highlighted the platform's broad capabilities in payments, fraud prevention, and customer insights.
The article mentioned that College Ave has already utilised Atelio for a new student financial product.
🥡 Takeaway: It’d be an understatement to say embedded finance in the US has had a turbulent 2024. Sponsor banks have been roasted for their compliance practices, and BaaS providers have started to hit the economic reality of playing in a commodity market. Amidst all this chaos, FIS announced an embedded finance offering this week. I can’t decide whether it’s an astute move or a total misreading of the market.
No doubt FIS is piggybacking much of the tech for this product off their acquisition of Bond, which they snapped up in June last year.
Historically, aquihiring some talent, wholesale importing their tech stack, and applying incumbent distribution to it has had mixed results for the big boys in the infrastructure space. This is partly because startups overestimate how good their tech is, and incumbents tend to overestimate their distribution advantage. I’m keen to see if either (or both) holds in this case.
The timing on this release is well… ballsy. It’ll be worth keeping an eye on as the offering either slurps up some logos as companies look to a safer set of hands to manage their infra, or it gets buried in the scrap heap of incumbent “innovation”.
⤷ NAB partners UK fintech Banked to boost merchant adoption of A2A payment solutions
🏃♂️ The Rundown: National Australia Bank (NAB) has teamed up with UK-based fintech Banked to promote account-to-account (A2A) payment solutions for Australian merchants.
The collaboration utilises PayTo to facilitate direct debit transactions for customers. The article notes that NAB's partnership with Banked aims to enhance payment processes, with initial A2A payment implementation expected for the first half of 2024.
🥡 Takeaway: A2A payments are super hot at the moment. In part, this is because “new” payment methods are rare. Yet, even in markets where all the infrastructure exists to make it work, we’re still in the early innings.
For example, in Australia, we have a faster payment network (NPP), which includes a reasonably sophisticated A2A pull infrastructure meant to replace the more manual and clunky direct debit system. All the pipes are in place to seamlessly make pay-by-bank work, and we’ve yet to see wide-scale adoption.
In a market like Australia, where interchange is capped, the reality is that the move to A2A will be slower as we don’t see the outrageous merchant transaction fees you see, for example, in the US. This is ironic given that the pipes are there and ready for mass adoption, but the economics aren’t yet there to push merchants to try to retrain customers into using a new payment method.
I imagine this is why this partnership has been framed as an attempt to “promote” A2A payments.
The upside is it’s just a matter of time. Much like we saw a “slow then fast” move to BNPL as merchants pushed it once they saw the benefit to their business. I think the same will be true for A2A — well, at least in the Aussie market.
⤷ Revolut launches standalone crypto trading platform for UK retail customers
🏃♂️ The Rundown: Revolut has launched Revolut X, a standalone crypto trading platform for UK retail customers. The platform offers over 100 tokens with 0% maker and 0.09% taker fees.
Revolut aims to compete with top crypto exchanges by providing easy on/off-ramping and low fees. The move follows previous regulatory challenges, including halting crypto services for UK business clients and terminating U.S. services due to regulatory uncertainties. Revolut's expansion in the crypto space signals a renewed commitment to providing accessible and secure trading options.
🥡 Takeaway: I must admit this one surprised me. To date, we’ve seen Revolut push its distribution into other parts of its app and focus on using its installed base to drive activity in the app. If you use it, you’ll be familiar with the constant stream of notifications telling you to try a new facet of the app or to refer a friend.
Having a standalone app seems to be a real departure from their ‘super app’ strategy. I imagine the logic here is that crypto is a big(?) revenue driver, so why not double down on the most fervent users?
I think this might be an interesting play if they push users to off-ramp into the Revolut app (and I assume they will).
⤷ Block integrates Afterpay with Cash App card
🏃♂️ The Rundown: Block is testing an integration of its Afterpay service with Cash App's debit card, aiming to expand the feature this year.
This move allows customers to convert purchases into short-term loans for a small fee. Block plans to gradually roll out the feature to its 24 million monthly active users. The integration signifies a strategic reset, combining the Cash App and Afterpay teams within Block.
🥡 Takeaway: The real promise of the Afterpay acquisition was to close the loop on the Square (now Block ecosystem). More specifically, it was meant to be what allowed a clean integration between the merchant and consumer side (if you want to learn more, check out the piece I wrote about the acquisition).
To date, Cash App and Afterpay have operated relatively siloed. Hopefully, these are the first hints at a deeper integration between the two.
⤷ Monzo raises a further $190 million
🏃♂️ The Rundown: Challenger bank Monzo secures an additional $190m in funding, led by Hedosophia, Capital G, and GIC. This follows a recent $400m financing round, raising its valuation to $5b.
With over nine million customers, Monzo ranks as the 7th largest UK retail bank. Despite post-pandemic challenges, the bank is diversifying services into pensions, investments, and insurance, aiming to achieve profitability this year. The funding will fuel product development and support international expansion into Europe and the US.
🥡 Takeaway: As noted above, the tide seems to be turning on the narrative that you can’t build a growing and profitable neo-bank. What’s more impressive is that the ones that have done it outside the US have achieved this not through a quirk of the law that has allowed them to hoover up interchange but by having to innovate (and… gulp) charge for their services. What is more impressive is that Monzo continues to grow rapidly (now the 7th largest bank in the UK by customer number), all while consistently ranking highly on customer satisfaction surveys.
The UK is the spiritual home of the neo-bank, and it’s no surprise they’re the ones that are the first to turn the corner. Now comes the question of when/if we’ll see any take the plunge and list on a mainboard somewhere.
⤷ Honeycomb Insurance grabs $36M Series B from solo VC-led Zeev Ventures
🏃♂️ The Rundown: Last week, Honeycomb Insurance announced it had closed a $36m Series B from Zeev Ventures. Founded in 2019, the company uses AI-driven technology for property insurance, eliminating the need for physical inspections.
After a $15m Series A in 2022, Honeycomb aims to reach $130m in premiums by 2024. The funding will be used to double employee count, introduce new products, and expand into new markets beyond landlord insurance.
🥡 Takeaway: Sleepy corners abound in the financial services sector, and having looked at the landlord insurance market not long ago, I can confirm it qualifies as sleepy.
As crazy as it sounds, given the rental market size in most countries, you tend to see a similar pattern emerge in most markets when it comes to this segment. Generally, there’ll be a handful of “larger” players with low market share and then a bunch of smaller specialist insurers that gobble up the long tail through partnerships with regional real estate agents. For example, as the article notes, Travelers has a minuscule 7% market share as the market leader in the US.
It’s an interesting play, and it’ll be fascinating to see how Honeycomb tries to ‘graduate’ out of the segment and into other adjacent products.
⤷ John Doran interviewing Nik Storonsky, Founder and CEO of Revolut at the Dubai Fintech Summit
This is a great short interview with Nik Storonsky, Founder and CEO of Revolut from the Dubai Fintech Summit. It’s pretty rare to hear from the reclusive Storonsky, and in this 18-minute chat, he drops some contrarian takes on building a neo-bank. It’s a great listen and well worth adding to your playlist this week.
⤷ Nigerian Neobank Roundtable: Moniepoint, Kuda, FairMoney
In this roundtable conversation from the FT Partners Fintech in Africa Summit in New York, Justin Norman speaks with the CEOs of three Nigerian digital banks: Moniepoint, Kuda, and FairMoney. They discuss strategies like starting with lending services to generate revenue and later expanding into banking infrastructure.
The conversation covers the evolving fintech landscape in Nigeria and, interestingly, how fintechs and banks are converging on similar spots in the market. If like me you’re an Africa fintech nerd this is one well worth a listen.
❤️ Show Some Love For FR
📧 Feel free to reach out if you want to connect. I'm @alantsen on Twitter, or you can DM me directly by clicking the button below ↴
Ps. If you like what I'm doing with FR, please share it on your social disinformation network of choice. I'd also appreciate it if you forwarded this newsletter to a friend who might enjoy it.
🙏 What did you think of this week's issue of FR?
I love it! ◌ I Like It ◌ Not Bad ◌ I Don’t Like It ◌ It’s Awful