Welcome in The exchange! If you received this in your inbox, thank you for your registration and vote of confidence. If you are reading this as a post on our site, please register here so you can get it directly in future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds to trends to analysis of a specific space to hot opinions about a specific company or phenomenon. There’s a lot of fintech news, and it’s my job to keep up with it — and understand it — so you can stay informed. — Mary Ann
Hey, hey, Mary Ann here, I’m sorry because I have COVID for the first time, but I should be thankful that it took me so long to get it, right? Fortunately, you can’t catch my germs through my computer or phone screen. I’ll fix it, but as a result… you’re left with another slightly shortened version of this newsletter! Huge credit and thanks to TechCrunch’s Kyle Wiggers, who once again saved the day by writing all the blurbs (and there was a lot to cover) here. Kyle, you are the best.
Since Thanksgiving is less than a week away, I’ll take this opportunity to say how truly grateful I am that I was trusted to put together this newsletter and that you all took the time to read and share it. I don’t take this lightly because without your support I wouldn’t be doing this. I know there are a lot of fintech focused newsletters out there so this really means the world. Okay, now that I’m done with the awful part of this newsletter (to quote my kids), let’s get straight to the news.
checkered announced that he had hired John Anderson, a former Meta executive, who will serve as the first head of payments. The move comes as the fintech startup turns to payments, both in terms of making them easier and with the goal of helping others do it better and faster. Our first thought is that Stripe is making a new move, but the interesting thing is that the two remain partners – for now. Plaid also announced that you are Suggest a signal is out of beta with early adopters like Robinhood, Webull and Uphold. With the help of Signal, companies are said to be able to “unlock instant ACH.”
Unlike crypto, some segments of the lending market appear to be stable – at least for now. Nu Holdingsthe Warren Buffett-backed Brazilian banking firm that offers credit cards and personal loans and is better known as Nubank, scored an almost triple jump in third quarter earnings on Monday. While Nu’s publicly traded U.S. stock has lost more than half its value this year, its customer base has grown to more than 70 million after a dramatically expanded footprint in Mexico. Nu’s total revenue in Q3 reached $1.3 billion, up 171%, while profit climbed to $427 million, up 90%.
Five years ago, Revolut, the British fintech company with an expanding portfolio of banking services, did News when it reached over a million customers across Europe. This seems strange now; this week, Revolution hits 25 million customers worldwide as the firm prepares to expand into new markets including India, Mexico, Brazil and New Zealand. Revolut was last valued at $33 billion, but as of at least last year, the company was still not profitable; Revolut reported a net loss of £167 million (~$197.94 million) in 2021, its biggest ever.
Are valuations falling and the fintech IPO backlog growing, as chatter in the Twitter-verse suggests? Silicon Valley Bank says yes on both counts in its state of the markets report out this week. According to the firm, the steepest valuation declines have occurred for late-stage fintech companies; “enterprise value” to “next 12 months” earnings ratios for public fintechs are down 55% since the market peaked in early January. Meanwhile, since the end of 2021, the number of US fintech unicorns has grown 38% to 159 — reaching a staggering $656 billion in total valuation, underscoring the huge backlog looking to exit.
According to a study according to the National Institute of Mental Health, 72% of startup founders are affected by mental health issues. Kind of going out of its way, fintech giant Brex launched a program, Catharsis, which is designed to provide resources dedicated to mental health. Brex says it will facilitate access to therapists by partnering with Spring health as well as extending a sleep tracking discount Oura ring. It seems like a worthwhile cause, but part of us wonders if the effort is meant to distract from Brax ill-received pivot away from small business support.
Charge cards are big business. According to for research and markets, the segment could be worth over $2 billion by 2026, growing from $1.96 billion this year. This is probably why banking as a service started Unit invested in it — the company on Tuesday launched a service that will allow customers to create custom charge cards for their own end users. The device handles almost all aspects of the back end, including card printing, compliance and transaction tracking. As such, it’s a different approach from corporate card issuers Brex and Ramp, says Unit CEO Itai Damti, who are strictly business-to-business — Unit sees its offering as more “business-to-business-to-consumer.”
If you want to read material about predicted economic problems in the technology sector, Ukraine-based fintech investor Vadim Sinegin wrote an excellent piece for TC+ on what founders can do to help their companies thrive during crises. Among other steps, he suggests founders redouble their efforts in developing and proving the quality of their products, manage risk and look for ways to bolster their company’s ranks with high-performing talent.
A little over a year ago, wise — the company formerly known as TransferWise — is gone public in the London market. Now, in search of new avenues for growth, Wise is ink expanded partnership with future remote hiring startup Deel to enable companies to pay employees faster (ostensibly). Wise and Deel’s new feature allows customers to send funds through Deel using just an email address, opening up new currencies to Deel’s existing payment infrastructure. To benefit, Deel customers simply need to open a Wise account and link it to the Deel platform.
In another post for TC+, fintech consultant Greg Easterbrook lays out four moves he believes fintech firms should make to set themselves up for success in the coming months. He urges startup founders to ensure their technology stacks support the latest in fintech and warns of competition from traditional financial firms offering more than a “super app” experience with strong benefits and benefits for members. Fintechs that outperform the market will either specialize in specific services or adopt a strategy of building compelling new products and benefits, Easterbrook says.
Despite being the world’s largest prepaid debit card company by market capitalization, Green dot usually goes under the radar. But the firm has faced challenges in recent months, revealing that it is in a dispute with Uber – one of its contract customers – and that “several” of its banking-as-a-service customers have refused to renew their contracts this summer. IN shake to right the ship, Green Dot appointed a new chief financial officer, chief operating officer and chief revenue officer this week and said it is focusing on technology modernization, including a move to a cloud-based core banking platform and card management system.
Fintech startup Boom and Mastercard are cooperating on a new map aimed at musicians and content creators (think TikTok influencers). How does one create a creator card, you may ask? Well, in Bump’s case, they do away with monthly fees and credit checks by taking into account things like a customer’s web3 assets (eg cryptocurrencies, NFTs) when setting credit limits. There are many other cards that do not require a credit check and at least one startup, Spectral, is trying to create a web3 “credit score” system. But Bump’s proposition is intriguing nonetheless.
StellarFi, a credit-building service that makes bill payments on your behalf and reports them to the major credit bureaus, is on the rise. The company announced this week that it surpassed $1 million in annual recurring revenue just five months after launching, and that its customer base has grown 83% in the past month. The current economic climate likely has something to do with StellarFi’s success – US inflation remains above 7% and short-term interest rates are at their highest level since January 2008.
Financing and M&A
Seen on TechCrunch and beyond
That’s all for now. I’m flying out next week and I hope many of you are too! This newsletter will be back on December 4th. I wish you all the best and a safe and healthy holiday week. xoxo, Mary Ann