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Issue #127: Mercury Makes Its First Acquisition, Airbase Gets Snapped Up For $325m, And Ant Group’s AI Play
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Mercury acquires Teal, Mercury Blog
🏃♂️ The Rundown: Mercury has acquired Teal, a seed-stage startup that develops accounting products, aiming to enhance its financial software offerings for businesses.
🥡 Takeaway: Mercury’s first acquisition is an interesting move by the SMB-focused neobank. As they noted in the press release:
“At Mercury, we believe your bank account should do more than hold your money.”
Translation: SMB-focused SaaS startups, take note—Mercury is expanding beyond banking into financial workflows. The battle for dominance in the business operations stack is heating up, with fintech players moving from wallets to full-on workflow management.
Much like Shopify has ventured deeper into financial services, SMB neobanks are now eyeing the SaaS space to capture a larger share of the financial operations process. One of Mercury’s major competitors, Ramp, has also been expanding aggressively into workflow adjacencies like procurement via acquisitions. The fintech vs. SaaS battle for SMB workflows is just getting started—watch this space.
Paylocity is acquiring corporate spend startup Airbase for $325M, Techcrunch
🏃♂️ The Rundown: Paylocity has announced its acquisition of corporate spend startup Airbase for $325m, pending regulatory approval and is expected to close within 30 to 60 days. Founded in 2017, Airbase offers software for spend management.
🥡 Takeaway: Speaking of SMB workflows, this is yet another acquisition in the SMB financial operations space. It is similar to Mercury’s acquisition of Teal, as both are clearly about expanding deeper into the financial operations stack. The contrast lies in Paylocity being more on the SaaS side of the ledger, with this deal edging them closer to the fintech space by adding spend management to their product portfolio. It’s interesting to see so much activity in this segment — another signal that we’re seeing a growing convergence of SaaS and fintech solutions in SMB operations.
Visa’s new A2A offering ‘opens’ choice and security via direct bank transfers in the UK, Pymnts
🏃♂️ The Rundown: Visa is set to launch a new A2A payment service in Europe, enabling users to make direct debits from their bank accounts with greater ease and security.
🥡 Takeaway: In previous issues, I’ve discussed (ad nauseam) how Visa has been all over A2A — a rare example of a financial incumbent (we’d call Visa that, right?) being ahead of the curve on what could one day pose an existential risk to their business.
As much as the discussion around A2A in many developed card markets has been dismissive (“People will never switch over to A2A/pay-by-bank. It’s too clunky, they’ll never give up their points…”), the reality is that several markets already have deep A2A/pay by bank penetration — specifically Finland, Malaysia, The Netherlands, Nigeria, Norway, Poland, Sweden, and Thailand, where it’s the leading e-commerce payment method according to WorldPay.
So, it makes total sense for the schemes to invest, at least as a hedge against the possibility that A2A could gain more traction over time in their marque markets.
Ant Group Launches AI-Powered Mobile App Zhixiaobao at 2024 INCLUSION·Conference on the Bund, Businesswire
🏃♂️ The Rundown: Lats week Ant Group launched Zhixiaobao, an AI-powered mobile app designed to simplify everyday tasks by connecting users to various services on Alipay, including meal orders, taxi hailing, and fitness advice. The app features specialised AI agents and is part of Ant Group's broader strategy to integrate AI into daily life
🥡 Takeaway: Yes, I know, another bot. But hear me out—this feels like a different approach compared to what we’re seeing from other fintechs.
A big part of the story here is that Ant Group has built a sprawling ecosystem. Alipay offers payments, wealth management, lending, insurance, credit scoring, and remittance—and that’s just the financial services. There’s also a suite of lifestyle services offered in app. So, having an AI agent to help users navigate all those offerings makes a lot of sense.
My guess is that we’ll see more of this approach in other multiproduct ecosystems soon. For example, I could easily see the likes of Revolut rolling out something similar across its portfolio of products.
Lloyds to use AI to automate trade finance checks, Finextra
🏃♂️ The Rundown: Lloyds Bank has partnered with Cleareye.ai to enhance trade finance processes by using AI technology to automate and streamline the review of trade documents. The implementation of Cleareye.ai's technology will use OCR, ML, and NLP to improve compliance checks and client efficiency.
🥡 Takeaway: I have to admit I got sucked in by the headline. My first thought was, “Here’s an interesting AI use case—trade finance! I wonder what they’re doing?” Nah, turns out it’s not all that interesting. According to the article:
“…the technology will use optical character recognition machine learning, and natural language processing algorithms to extract critical information from a range of trade finance documents”
Another great example of corporates being conservative with how they adopt AI.
Exclusive: Colombian real-time payments startup raises $35M Series B, Axios
🏃♂️ The Rundown: Cobre, a Colombia-based treasury platform, has raised $35m in Series B funding led by Oak HC/FT to enhance its payment and treasury management services across Latin America.
🥡 Takeaway: Cobre looks like a super interesting company. According to the article:
Cobre partners with financial institutions and opens accounts where its customers and their payees bank (as transfers within the same bank are instantaneous), and keeps an internal ledger of the money movement.
If a customer seeks to send money from their BBVA account to a payee's Bancolombia account, for example, they send that amount to Cobre's BBVA account.
Cobre then immediately moves that amount from its own Bancolombia account to the payee's account. Cobre is also able to complete instant cross-border payments in some 19 currencies, with customers also able to embed Cobre payments into their own apps and sites.
It feels like a “Moov for Colombia”. Seems like a great concept in a market with lots of growth potential. Definitely one to watch.
Ziina banks $22M as growth explodes for the UAE-based fintech for small businesses, Techcrunch
🏃♂️ The Rundown: Ziina, a UAE-based fintech startup initially launched as a P2P payment app, has raised a $22m Series A funding round and has expanded its offerings to cater to 50,000 retail and business customers, mainly targeting SMEs with payment solutions and financial management tools.
🥡 Takeaway: According to the article, Ziina started as a peer-to-peer (P2P) payment app designed for splitting bills (group dinners, rent, etc.). But like many fintechs, they saw the B2B payments opportunity and have since pivoted to include SME-focused financial services. It's an all too common story.
The UAE fintech space is fast-growing, and while competition is heating up, it’s great to see companies like Ziina scaling up their solutions to support small businesses.
As a side note, the article mentions that Ziina is also “venturing into expense management with the upcoming launch of its card product, ZiiCard.” It’s always satisfying when a trend carries through an entire issue of FR.
How Money Moves Podcast: All Things B2B Payments, with Brandon Lloyd of Forward, Bo Jiang of Lithic and Wade Arnold of Moov, The Week In Fintech
If you’re a payments nerd like me, this How Money Moves Podcast episode is a must-listen. Brandon Lloyd (Forward), Bo Jiang (Lithic), and Wade Arnold (Moov) dive deep into the evolution and challenges of B2B payments, touching on topics like infrastructure transformation, the complexity of embedded payments, and regulatory hurdles.
The Booming Crypto Use Case That's Happening Right Now, Odd Lots
If you’re a regular reader of FR, you know my view on stablecoins (spoiler: they’ve proven to be crypto’s killer use case). In this episode of Odd Lots, Austin Campbell, an adjunct professor at Columbia Business School and founder of Zero Knowledge Consulting, dives into the real-world problems stablecoins are solving. It’s definitely worth a listen to understand where stablecoins are gaining traction.
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Re: Lloyds, I had a chuckle on your take. The last time a bank proclaimed to use technology to give itself an edge in trade finance was Greensill. I am guessing the deals that a high-street bank like Lloyds is financing have much lower risks and they just need something to get through the operational workload. Even if they put in top-of-the line AI tools and throttled # of deals, they will be hindered by 1) Their compliance departments are not going to allow them to take on too much counter-party risks and 2) the credit risk team because the ticket sizes for each deal is high. Trade financing is really interesting but structured in a way at a bank to be really boring ... or safe.