Issue #47: CBA Has Another Crack At BNPL, Stripe Secures The Bag (Again) And Diem Wants Your Old Clothes
đ Hi, FR fam. I hope youâve all had a great week.
Letâs kick things off with another awesome thread from Frank Rotman of QED. This time he tackles why banks struggle to copy fintech startups. As always, well worth a read.
đŁ The News Grab Bag
Goldman Sachs juniors call out âinhumane treatmentâ â Nordstrom looks to get into e-commerce live streaming â Loans that hijack your phone are coming to India â Railbank opens up shop in Australia â Chime might be listing â NatWest faces money laundering charges â How Dapper Labs secured the NBA bag â EToro is close to SPACâing â Wise (nĂ©e Transferwise) considers a direct listing on LSE.
đ Notable Funding Announcements
It was another frenetic week for financings in the world of fintech. In total, 68 funding rounds were announced, totaling $2.5b.
đž Stripe Raises $600m As It Approaches A $100b Valuation â
Last week Stripe announced a massive $600m funding round that valued the company at $95b. The round had participation from Allianz X, AXA, Baillie Gifford, Fidelity Management & Research Company, Sequoia Capital, and Irelandâs National Treasury Management Agency (NTMA).
đ€ My Take: What is there left to say about Stripe? At this point, it feels like everything that could be said about how amazing Stripe is has already been said. Itâs actually amazing how theyâve captured the imagination of not only the fintech industry but more broadly the startup world â which is fairly incredibly if you consider that theyâre a âboringâ payments company. Itâs a real testament to what an amazing company the Collison brothers have been able to build. đ đ
As Stripe continues its march towards a $100b valuation and a listing in the not too distant future, itâll be interesting to see what they unlock next in the money movement world. Notably, in the presser announcing the raise, they called out their Global Payments and Treasury Network (GPTN) and the products theyâve built atop that â namely Billing, Capital, Connect, Issuing, Radar, Terminal and Treasury.
In many ways, the products outside of their core payments offering are what most in the world of fintech have been salivating over. Whether itâs their issuing offering, their lending-as-a-service product, or their Treasury offering, the real excitement is around what other parts of the money movement process Stripe can/will innovate on. Itâll be fascinating to see how they expand their offering into markets outside the US.
Itâs also worth mentioning that on the back of the funding round, which had participation from Irelandâs NMT, Stripe also announced theyâd be adding 1,000 new jobs to their Dublin headquarters. Along with this, they noted theyâd help to grow sustainable finance in Ireland and will be supporting 10,000 Irish SMEs to trade globally over the next five years. What isnât there to like about Stripe?
đ Diem Raises $5.5m Seed Round â
Diem (not Diem or Diem) last week announced theyâd raised a $5.5m seed round which Fasanara Capital led.
đ€ My Take: This really is a different take on the challenger bank concept. Yes, they have a debit card, and they offer an account along with an app. However, this is where they make a hook turn. According to their website, they offer their customers the ability to sell their possessions instantly. Thatâs right, rather than posting your no longer in vogue muumuu on eBay, you can send it to them, and theyâll instantly load your card with cash once you accept their offer. As their CEO noted in a recent Techcrunch article:
âDiemâs mission is to empower consumers to value, unlock, and enjoy wealth they never knew they had. All of this while fuelling the circular economy and supporting the commitment to sustainability as our key value proposition. DIEM makes it possible for capitalism and sustainability to co-exist.â
I canât decide whether this a brilliant way to acquire customers or whether itâs the most complex way possible to stock up an eBay store. Regardless, itâs definitely a fintech startup worth keeping an eye on â if not simply to find out what kind of crazy stuff people try to sell to them.
âïž Things You Should Know About
đŠ CBA Will Undercut Afterpay In Buy Now, Pay Later â
After struggling to find a way to compete with the BNPL players in Australia, one of the big four banks has finally decided to offer a BNPL product of their own. According to the article, CBA will be launching an open-loop BNPL product that will allow users to make payment in four fortnightly, interest-free installments using a virtual Mastercard, which will all be managed through a digital wallet.
If this sounds familiar, itâs because itâs basically how Klarnaâs product works. For those not familiar with it, Klarna allows you to essentially BNPLâify any purchase through spinning up a one-time card in the app that you can pay in-store or online with. Hey presto, now you can pay that new pair of jeans off over 4 installments.
Interestingly, CBA made a sizable investment in Klarna earlier last year â when I say sizable, it was a $300m cheque for 5.5% of the company. In the press release touting the investment, CBA CEO Matt Comyn noted:
âBy partnering with Klarna, we are bringing together our market leading digital technology, merchant relationships and strong customer network with Klarnaâs innovative payments technology and integrated shopping experience for the benefit of CBA customers and many more Australian consumers.â
Ouch, with friends like theseâŠ
Whatâs even more interesting is that the CBA also tried a, shall we say, more âtraditional approachâ to combatting the BNPL brigade. Yep, you guessed it; they offered a new credit card. Neo, CBA's bright yellow vertical card, was meant to be their response to BNPLs eating away at their younger customer base.
On the one hand, what is even going on with this âstrategyâ? On the other hand, why not throw the kitchen sink at staving off the BNPLs at the gate? đ€·ââïž
đ đšđŠ Revolut Exits Canada After Trialing Beta For A Year And A Half â
Last week UK challenger bank Revolut announced they were pulling the pin on their Canadian beat launch.
According to the article, theyâll be winding down their beta product in stages, with account top-ups no longer being available as of March 29. Physical card orders will cease on April 12, and account access will no longer be available as of May 15.Â
Anyone that has done international expansion in the world of fintech will tell you itâs really, really damn hard. Beyond dealing with regulators, standing up a product and developing local banking and vendor relationships, the actual important part of acquiring customers is extremely challenging â and canât really be done till after the product is operational. After all, this is a financial services product, not a new to-do app.
As I mentioned back in issue #45, Revolut has been quietly chipping away at global domination. It really feels like theyâve steadied the ship as they look towards the US, and as part of that, it seems some of their aspirations in other parts of the world will need to take a back seat.
đŠ Australia To Impose Tighter Restrictions On New Challenger Banks â
Last week, Australiaâs prudential supervisor commenced a consultation â⊠on an updated approach to licensing and supervising new authorised deposit-taking institutions (ADIs)â. The discussion paper they released outlined some of the proposed updated requirements for being granted a banking license in Australia.
As the article outlines, it does feel like APRA is tightening the requirements for launching an ADI in Australia. Notably, the paper suggests new product launch requirements for restricted ADIs and new ADI holders.
In many ways, the updated requirements make sense, given weâve seen several Aussie challenger banks stall as they figure out how they go to market. Having said this, the new requirement place a high bar on the initial product a neo bank has to take bring to market â requiring both an asset AND a deposit product launch is a big lift for any early-stage challenger bank. Itâll be interesting to see where APRA land after the consultation period.
đ§ Podcast Recommendations
Zach Bruhnke from HMBradley â HMBradly sometimes goes under the radar in the US challenger bank melee. Having said this, the savings-focused challenger bank seems to be steadily growing and building a cult following amongst those who like saving for a rainy day. In this podcast, Zach Bruknke talks about HMBradleyâs origin story and the challenges of raising money for a new bank. This is a highly recommended listen.
From Palantir to Banking with Sean Hunter, CIO @ OakNorth â In this installment of For Fintechâs Sake, Zach Pettet interviews CIO of Oak North Sean Hunter. Itâs a great conversation about the rise and rise of UK SME challenger bank, OakNorth.
â€ïž Show Some Love For FR
đ You can check out Radar, an open database of Australia's fintech ecosystem. You can find it here â đĄÂ SideFund Radar
đ§Â Feel free to reach out if you want to connect. I'm me@alantsen.com and @alantsen on the Twitters.
đžÂ As always, our cover image is provided by Death To Stock Photos. You should get your stock images from them too.
Ps. If you like what I'm doing with FR, please feel free to share it on your social disinformation network of choice. I'd also appreciate it if you forwarded this newsletter to a friend you think might enjoy it.
đ What did you think of this week's issue of FR?
I love it! â I Like It â Not Bad â I Donât Like It â Itâs Awful