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Issue #118: Revolut Reports A Record Profit, Robinhood Snaps Up An AI Startups, And Five Asian Markets To Connect Their Instant Payment Networks
👋 Welcome to another edition of Fintech Radar, your weekly go-to source for deep insights into what’s happening in fintech.
If you’re new, here is a breakdown of what you can expect from each issue.
This weekly missive is written for founders, operators, and investors in fintech. I prioritise quality, depth, and provocation each week over rehashing press releases and partnership announcements. Each week, I dig in and explore the implications of what’s happening in the industry — without all the fluff.
My goal is to spark discussion, highlight emerging trends in fintech that could become central themes in the coming years, and help you connect the dots.
If you missed our recent editions, you can catch up here. 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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⤷ Britain's Revolut surges to record profit as it seeks $40 bln valuation
🏃♂️ The Rundown: Revolut last week reported a record pretax profit of £438m for 2023, driven by strong user growth and a surge in interest-related income, as it seeks a $40b valuation in a $500m share sale.
Revenue nearly doubled to £1.8b, with interest income rising from £83m in 2022 to £500m in 2023. The company, with 45 million global customers, is also progressing on its UK banking licence application.
🥡 Takeaway: A continuing theme in fintech this year has been how the once-maligned challenger banks have turned the corner and become (gulp) profitable. While not all have made it to the promised land (pour one out for all those fallen neobanks), the mainstays in the segment, previously written off as bad business, are now turning into revenue-generating beasts.
In the case of Revolut the doubling of revenue and 45% jump in retail customers (and a 47% increase in active retail customers) is impressive in anyone’s language. What’s more interesting when you dig into the numbers is the revenue breakdown (see p.10 of the Annual Report — and I assume rounded up).
Payments: 27%
Subscriptions: 14%
Foreign Exchange: 17%
Other Income: 10%
Wealth: 5%
Interest Income: 28%
There are lots one could delve into here, but the one thing that surprised me was subscription revenue. I must admit I wasn’t expecting it to account for 14% of revenue (~£243m). In a world where most banks would baulk at charging a subscription, this shows there is an appetite for customers to pay where there is value.
The uptick in Revolut’s financial fortunes is stark, and naysayers may point to various factors to discredit this improvement, but one thing is clear—neobanks are back in the fintech spotlight and profitable!
⤷ Five Asian markets to link domestic instant payment schemes
🏃♂️ The Rundown: The Bank for International Settlements (BIS) is progressing towards the live implementation of Project Nexus, aimed at enhancing cross-border payments by connecting domestic instant payment systems (IPS) globally.
This follows a successful prototype phase linking Eurosystem's Target Instant Payment Settlement (Tips), Malaysia's Real-time Retail Payments Platform (RPP), and Singapore's Fast and Secure Transfers (Fast).
The go-live will connect IPS in India, Malaysia, the Philippines, Singapore, and Thailand. Partner central banks and IPS operators will establish the Nexus Scheme Organisation (NSO) to manage the scheme.
🥡 Takeaway: If the meteoric rise to profitability of neobanks is one of the headline themes in 2024, the globalisation of faster payment networks is right up there with it.
In previous issues of FR I’ve highlighted the growing reach of local instant payment networks (namely UPI and PIX) which are slowly making their way into several major global markets This initiative from the BIS is another great example of how countries are coming together to take local networks global. In this case, with the possibility to reach 1.7 billion people.
The globalisation of these networks remains one of the most chronically under-discussed trends in payments. Although how it all plays out is unclear (i.e., a world of bilateral agreements or one of multilateral cooperation), one thing is certain: the tracks are being laid for a move from a world of remittance to one of plug-and-play international payments. This shift will undoubtedly have a massive impact on the future of global payments.
⤷ Ant Group acquires Dutch payments vendor MultiSafePay
🏃♂️ The Rundown: Ant Group has acquired Dutch payments vendor MultiSafepay, expanding its reach into Western markets. MultiSafepay, known for its omnichannel payment services, will be integrated with Antom, an Ant International subsidiary supporting merchants in over 40 markets. The acquisition, rumoured to be ~$200m, strengthens Ant Group's presence in global commerce.
🥡 Takeaway: Another under-discussed theme—and probably more on the emerging side of things, to be honest—is the re-emergence of Chinese fintech behemoths Ant and Alipay.
Both have been making moves to expand their reach into Asian and Western markets. For example, you might recall that late last year Ant expanded their payment ecosystem of e-wallets, allowing wallets from 10 Asian markets to make payments in mainland China. This latest move sees them making further strides across Europe with an acquisition.
The days of Chinese super app discourse might be over, but there seems to be growing activity from the Chinese fintech juggernauts. Definitely, worth keeping an eye on.
⤷ Paxos gains approval for Singapore stablecoin launch with DBS partnership
🏃♂️ The Rundown: Paxos has secured regulatory approval from the Monetary Authority of Singapore (MAS) to launch a stablecoin in partnership with DBS Bank, Southeast Asia's largest bank.
This approval marks Paxos' third international market after the US and UAE for issuing stablecoins. DBS will provide cash management and custody services for the stablecoin reserves, enhancing trust and security for wider adoption.
🥡 Takeaway: Singapore continues to draw in more stablecoin issuers as it further cements its place as one of the most friendly jurisdictions in the world for issuers.
After being one of the few markets to provide a regulatory framework for the issuance of stablecoins, partnerships between crypto startups and incumbents are starting to pick up steam.
Singapore is really hitting its stride in the crypto world, especially when it comes to stablecoins. It's become the go-to place for launching these digital assets, which are turning out to be one of crypto's biggest success stories. This is only strengthening Singapore's position as a prime spot for crypto startups to set up shop.
⤷ Robinhood snaps up Pluto to add AI tools to its investing app
🏃♂️ The Rundown: Robinhood has announced the acquisition of AI-driven research platform Pluto Capital. Pluto's capabilities include advanced data analytics and personalised investment strategies. Jacob Sansbury, Pluto's CEO, will join Robinhood to integrate these AI tools. Founded in 2021, Pluto raised $4m in seed funding, valuing it at $12m from investors including at.inc/, Switch Ventures, and Caffeinated Capital.
Robinhood’s VP of Engineering, Mayank Agarwal, praised the acquisition, highlighting its alignment with Robinhood’s mission to democratise finance.
🥡 Takeaway: Just last week I discussed Nubank’s purchase of Hyperplane just seven months after the AI startup announced its seed round and this week we have Robinhood gobbling up Pluto, an “AI-powered research platform”.
My guess is these acquisitions are emblematic of how challenging it is to hire AI engineers at the moment. Given that most VCs will throw a term sheet at you if you have a .ai domain, let alone if you have any semblance of traction, it’s tough to get the critical mass of talent (even more so those who understand the sector) at a company right now.
In many ways, these tuck-in acquisitions are currently the best recruitment mechanism for those looking to incorporate AI at scale into their product offerings. Expect more of them as the AI hype continues to build in fintech.
⤷ Family finance app Bling raises $12 million
🏃♂️ The Rundown: Bling, a German family fintech app, secured $12 million in a Series A funding round led by Owl Ventures, with additional support from Neosfer, Angel Invest, and PEAK. This funding brings Bling’s total raised to over $15m.
Founded in 2021, Bling offers educational, family-friendly digital solutions in investment, payment, and mobile communications to enhance financial and media literacy for German families. The funds will help scale its market presence in Germany and support the launch of a new insurance product.
🥡 Takeaway: It’s surprising that in 2024, financial services are still stuck in “single-player mode.” In every other aspect of our digital lives, “multiplayer mode” has become the norm— from spreadsheets (e.g., Google Sheets) to design tools (e.g., Figma). Yet in financial services, it’s still a case of “yours” and “mine”. This generally disconnected experience is particularly glaring within the family context. It was best put in this piece from the now-defunct Braid team (in what I still think is one of the best pieces on multiplayer fintech):
“If the primary tool of one’s financial life is the checking account, what’s missing right now is a layer of collaborative tools that live on top of our primary accounts. These tools could allow us to spend, lend, borrow, save and trade together. This is an area of enormous opportunity.”
In many ways, multiplayer still feels like an interesting attack vector and point of differentiation for consumer fintech startups. No doubt many have tried some version of it — yet none has cracked the nut on building a seamless multiplayer experience for finance. If you want to read more about the challenges of building in this segment, check out this excellent post-mortem piece from the Braid team. It highlights the general challenges of building a consumer fintech product, as well as the specific difficulties of developing a multiplayer product in this space.
One day, a fintech startup will crack this nut, and it’ll be a massive unlock that we’ll look back on and say, “That was obvious.” Until then, let’s hope capital continues to be poured into the segment to fuel companies trying to multiplayer products.
⤷ MUFG invests in Thai super app Ascend Money
🏃♂️ The Rundown: MUFG (Japan’s largest bank) and Finnoventure Private Equity last week announced they’d invested $195m in Thai fintech unicorn Ascend Money.
Ascend Money, with 30m users in Thailand, became the country’s first fintech unicorn back in 2021 when after its last round it was valued at $1.5b. Suphachai Chearavanont, the founder, sees this investment as pivotal for growth and creating an inclusive financial ecosystem.
🥡 Takeaway: Super-apps discourse has died down a fair bit over the last year. It doesn’t feel that long ago that a bunch of Western fintech startups (and even some social media platforms) were talking about their aspirations to become a super-app.
Yet, in most markets across the Subcontinent and ASEAN superapps continue to be the way most interact with their financial lives. Although we generally talk about the dominant players like WeChat, Alipay, Gojek and Grab, it’s often under-discussed how the super-app model has become the go-to way for fintechs to build in the region. Moreover, the scale even some of the smaller players in markets like Thailand and Korea (see for example Kakao Pay) have been able to reach using this model is astonishing.
Interestingly, one of the few fintech startups in the West still pushing hard on a super-app model is Revolut — and it seems to be working. It’ll be fascinating to see if they can replicate the success seen in Asia and if super-app discourse picks up again as startups look for new ways to sell their vision of a financial ecosystem to investors and — importantly — users.
⤷ Mobile services are unleashing new banking frontiers with Gigs' Hermann Frank
In recent months, we’ve seen Revolut and Nubank add mobile services to their products and it seems we might be witnessing a resurgence in the financial services + telco play.
In this short podcast, Gigs Founder, Hermann Frank, chats about how they see the MVNO-as-a-service space playing out and where they're seeing adoption for the offering. It’s a fascinating segment that I think we’ll see more consumer fintech offerings explore as they look to diversify their revenue streams.
Add this podcast to the rotation if you’re looking for a quick deep dive into the world of MVNO-as-a-service.
⤷ Building an Intelligent Business OS, with Runway CEO Siqi Chen
In an episode of “The Cognitive Revolution,” Nathan Labenz interviews Siqi Chen, CEO of Runway, about how the company, which is focused on developing an intelligent business operating system, is using AI in their company.
It’s a great conversation. Chen provides some great insights into how he sees AI impacting the finance function — which I think is a place we might actually see some genuine innovation due to AI. It’s a wide ranging conversation and well worth adding to your playlist this week.
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