FedFis Bulletin

Uncle Sean's Update - 7/30/21

7/30/2021

Happy Friday!!!

WOW - It was another action packed week so let’s get to it!!! Here is the Uncle Sean Update for 7/30/21:

It’s Fed Week!!!! Guess what – nothing happened - again LOL!!!! Here is the non-eventful FOMC statement as well as Chairman Powell’s press briefing video and transcript (warning – the video is about an hour long and unless you are a super-dork like me, you will fall asleep). All kidding aside there were some important notes from Chairman Powell’s press briefing. Here is Uncle Sean’s geeked-out op-ed (not that anyone cares so feel free to scroll down, but I’m gonna’ tell it anyway – LOL):
- From a market standpoint I personally love this new Fed. Powell has been telling us the same story for months now so there is no shock to the markets.
  - Inflation continues to run hot and way above the targeted 2.5% rate. However, it is seen as largely transitory and due in large part to supply shortages and concentrated in a few areas of the economy (specifically mentioned new and used automobiles as well as rentals due to worldwide semiconductor shortages resulting in production limitations).
  - Discussions regarding the “timing, pace, and composition” of eventual tapering has begun – but no timeline as of yet as more data is needed.
  - The risk to the economy of tightening too soon is far greater than continuing the current expansionary policy. “Unknowns” (uncertainty is almost always bad) continue to drive economic concerns.
  - Impact of expiring supplemental federal unemployment benefits is still unknown (set to expire on Sept 6, but about half of States have already canceled them).
  - The federal eviction moratorium from the CDC is set to expire on July 31 and the economic effects are largely unknown at this time.
  - Covid Delta variant is creating significant concerns as it is unknown as to how this may or may not affect the economy – potential for shutdowns, school reopening concerns, daycare closing – all of which could significantly impact employment for caregivers as well as working parents, etc.
  - 2Q GDP came in below expectations at 6.5% versus 6.3% in 1Q and significantly lower than expectations of 8.4% (you can bet your life that the Fed was pouring over this data before it became publicly available)…
- Ahhh… Uncle Sean reminisces of learning how to drive on the ice in Oklahoma – take your time and practice slow and easy corrections….. If you jerk the wheel or hit the brakes too fast, you’re going to have problems. While this is good for the markets and the overall economy (long, slow, protracted recovery), it certainly continues to place an unequal strain on community banks as they are not designed to operate for extended periods of time in a zero interest rate environment.

Robinhood (Nasdaq: HOOD) priced their IPO at $38 per share (low end of the expected range of $38 - $42) giving them a very nice valuation of $32B but certainly less than some had thought. “HOOD”” opened at $38 raising $1.89B, but traded down most of the day and closed at $34.82 (down 8.37%).
- Here’s some good news – Robinhood did not have to halt trading on their own shares to raise emergency liquidity… LOL!!
- Okay, okay – I know Robinhood has been easy to highlight concerns and poke fun of (comes with the territory of being a maverick and revolutionist), but Uncle Sean does support their overall goal of democratizing finance. Truth be told, I don’t know of a single Gen Z person who hasn’t asked me or told me about Robinhood and how cool it is. From that perspective, they are certainly winning and have awakened an entire new generation of retail investors.

SBA announced the opening of the PPP Direct Forgiveness Portal and will begin accepting applications from borrowers on August 4 for loans up to $150,000 from participating lenders that opt-in to this program through https://directforgiveness.sba.gov.

Check out Atomic (much more than just a payroll API) getting it done this week!!!!
- Digital Onboarding and Atomic pair up to modernize direct deposit acquisition through the Digital Onboarding account engagement platform.
- Unifimoney selects the Atomic API-powered solution to enable users to set up and modify payroll direct deposits “quickly and easily, circumventing the cumbersome paper-based processes”.

Bambu and Moven partner to help FI’s deliver next-gen wealth management solutions.

MOCA has partnered with the Armed Forces Financial Network (AFFN) to offer MOCA’s Digital-First Next-Generation Card-Based Payment Platform to the United States military community worldwide. Nice job MOCA and thank you for supporting our military personnel!!!!

M1 Financial announced their M1 Owners Rewards Card Visa credit card issued by Celtic Bank with rewards of up to 10% if you own fractional stock shares in the rewards vendor within the M1 SIPC account. Individuals who own at least 1 cent of a fractional share of a stock on the day of a purchase are eligible for the boosted rewards. All cash back is automatically deposited into your investment portfolio which can be re-invested or withdrawn.

Current selects The Bancorp Bank as their new sponsor bank following a “year of tremendous growth for Current, which has nearly 3 million members, significantly up from the 1 million mark it reached in 2020.”
- Full disclosure – I don’t know for sure, but it doesn’t look like The Bancorp Bank is replacing the other sponsor banks for Current, rather just supplementing. Maybe a pre-emptive move by Current in order to avoid an HMBradley moment?

Kleberg Bank (great folks over there) announced a partnership with Autobooks to provide Kleberg Bank’s SMB customers with a simplified solution for digital invoicing and online payments conveniently located within Kleberg’s online banking platform.

Marqeta inks a deal with Google Pay to power the new virtual Google Pay balance card. This is great news for Marqeta as it is a HUGE logo win; and it allows for revenue diversification. Recall the 5/21 Uncle Sean Update where we talked about the Marqeta S-1 “on page 24 of the S-1 under Risk Factors, Marqeta states that Square accounted for 60% of 2019 net revenue, 70% for 2020, and 73% for 1Q2021 revenue…” I just quoted myself in third person, didn’t I (eyes rolling)…. LOL!!!

Citizens Bank has agreed to acquire Investor Bank in a massive $3.5B mega-merger transaction. It will be interesting to see how much the recent White House Executive Order plays into this from a regulatory scrutiny standpoint (check out the link to the 7/9 Uncle Sean Update where we detailed the EO directive to “update guidelines on banking mergers to provide more robust scrutiny of mergers”)…. In the interim, here is the really well done Investor Deck by Citizens Bank detailing the acquisition.

Visa rolls out BNPL feature. For more info, check out Visa's API model for installment solutions for “pre-purchase, during purchase, and post-purchase programs”.

Mastercard launches new Start Path incubator program for cryptocurrency and blockchain startups

SWIFT launches SWIFT Go to enable near real-time low-value payments directly from bank accounts. I’ll let you determine whether this is a threat to Ripple or a reactionary response by SWIFT to try to remain relevant…. Hmmmm…..

Zelle announced 2Q21 transaction results that includes the processing of “$120 billion on 436 million transactions. Year-over-year sent payment values increased by 68%, while payment transactions increased by 58%.” This compares to 1Q results of $106 billion on 392 million transactions. WOW – that is a STRONG trajectory; and pretty soon that’s going to add up to some real money – LOL!!!!

Fintech funding continues to be smoking hot this week (is unicorn status even a thing anymore???):
- Sila (API regulatory compliant platform for Payments-as-a-Service) raised $13M in Series A funding.
- Lolli (bitcoin rewards) raised $10M in Series A funding round.
- Nium (cross-border B2B payments) raised $200M in Series D round with a valuation just north of $1B with U.S. expansion plans (3% of revenue now, plans to increase to 20% in 18 months).
- Paystand (B2B payments)( raised $50M in Series C funding.
- iCapital Network (wealthtech alt investing platform) raised $440M funding round at a valuation of approximately $4B.
- Fireblocks (blockchain security service provider) raised $310M in Series D with a $2B valuation.
- At-Bay (cyber insurance) raised $185M Series D with a valuation of $1.35B.
- Artis (real-time lending and payments) raised $7M in Series A funding round.
- Zilch (BNPL) raised an additional $110M in Series B extension and will use the funds to expand into the U.S. and enhance their growth in the U.K.
- Lithic (card issuing – fka Privacy.com) raised $60M in Series C with a valuation of $800M.
- Figure (financial services through Provenance blockchain) raised $200M Series D with a $3.2B valuation.
- Prime Trust (fintech infrastructure) raised $64M Series A $64M in Series A funding.
- Mercury (neo business bank) raised $120M in Series B at a $1.6B valuation touting 40,000 business customers.

Random Uncle Sean Stuff:

28 days until college football!!!

With respect to the “dog days of summer” – here are a few “it’s so hot” jokes to brighten your day:
- It’s so hot I saw a bird pull a worm out of the ground with an oven mitt!
- It’s so hot that Siri asked me to dip her in a glass of ice water!
- It’s so hot my chicken just laid an omelet!
- It’s so hot that the catfish are already fried when you catch ‘em!
- It’s so hot that the seatbelt buckle makes a darn good branding iron!
- It’s so hot, the frozen pizza I bought at the store was ready to eat by the time I got home!
- And my personal favorite - It’s so hot they installed a fan in the debt ceiling!!!!!

Have a GREAT weekend and please stay safe!!!

Uncle Sean

Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis

FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.

Uncle Sean's Update - 7/23/21

7/23/2021

Happy Friday!!!

Here is the Uncle Sean Update for 7/23/21:

Special shout out and congratulations to Clair (embedded payroll platform with mobile banking including Mastercard debit card, savings, instant wage access, P2P, etc.) for completing their SOC 2 Type1 audit and certification!!!!

Square announces the launch of Square Banking….. Okay, so Uncle Sean has been making fun of the “Square Banking” announcements for a few months. Since Square is now a regulated and chartered bank (Utah ILC), it is not overly surprising to me that a bank would eventually provide… uh… well… um… “banking products”…. LOL!!! However, I certainly recognize that it is pretty cool when you look at the entire vertical. Square started out as a solution for SMB’s to accept card payments and has evolved into a host of financial solutions (Cash App, Square Capital, etc.) and now has an FDIC charter. Square Banking now allows SMB sellers using Square Payments to have a true holistic embedded finance solution via Square Checking, Square Savings, and Square Loans that in some instances allows for automated and instant updates for sellers to manage their finances. Add in Square Payroll and you have the full SMB cash flow vertical from POS and integrated inventory management to payments, loans, payroll, and most recently Team Management via Square’s acquisition of Crew. Yep – pretty cool.

Mastercard announced they will enhance their existing crypto card program for cryptocurrency wallets and exchanges, making it simpler for partners to convert cryptocurrency to traditional fiat currency. This will enable more banks and crypto companies to offer a card option to people wanting to spend their digital assets anywhere Mastercard is accepted. Mastercard named a suite of partners that they are working with to enhance the existing crypto card program including Evolve Bank & Trust and Metropolitan Commercial Bank to issue cards, Uphold and BitPay to provide real-time crypto wallet technology, and i2c Inc., Apto Payments and Galileo Financial Technologies® to support processing and program management.

Visa announced an agreement to acquire Currencycloud (the cross-border payments firm powering many fintech and challenger banks) for about USD $962M.

Bill.com is on the hunt again (recall back in May when they acquired Divvy for $2.5B) with their latest announcement to acquire Invoice2go in a stock and cash transaction valued at about $625M.

BlockFI received a cease and desist order from the New Jersey Attorney General. The order calls for the company to stop offering its BlockFi Interest Accounts (DeFi) to new customers in New Jersey, effective Jul. 22 and contends that “BlockFi Interest Accounts are at least partly funded through the sale of unregistered securities, violating securities laws in New Jersey.” This was followed by another cease and desist order by the Texas State Securities Board and a Show Cause Order by the Alabama Securities Commission.
- BankingDive reported that “the enforcement action comes amid growing concern for consumer safety as decentralized finance platforms offer elevated yields but represent a risk to users because losses are not insured by the Federal Deposit Insurance Corp. (FDIC) or protected by the Securities Investor Protection Corp. (SIPC).”
  - Hey – do you think they read the Uncle Sean DeFi rant from 7/9/21 (wait…. did I just plug my own blog in third person… again??? LOL!!!)?

Venmo finally removes global view – the public feed where you could see transactions not just between your friends, but those between complete strangers.

Constrained by their Sponsor Bank (Hatch), HMBradley shifts to “invite only mode” and seeks additional Sponsor Banks. Let’s look at a couple of points here:
- HMBradley has brought in $375M+ in customer deposits over the last year (with a 300% increase since January) – that’s a lot for a startup in a short amount of time.
- A quick look at the FedFis Bank Database platform (yessir – that’s another plug), Hatch Bank had $41M in deposits (period end balance) as of 3/31/20 and has grown to $233M in deposits as of 3/31/21. They haven’t filed their June call report yet, but I can only imaging that deposits have swelled well beyond the March balances.
  - To be fair to Hatch Bank, there is such a thing as “deposit concentration risk” from a regulatory standpoint that many fintech companies don’t see / aren’t aware of. This certainly seems to be the case here with HMBradley’s rapid growth, which in turn prompted Hatch to pump the brakes a little. Unfortunately, pretty much all FI’s are flush with deposits right now so it’s difficult for Hatch to sell this excess liquidity as a mitigation strategy (Hatch is sitting on about $200M in cash as of 3/31/21 up from $12M YoY).

Upgrade announced the launch of their Upgrade Bitcoin Rewards Card. The Visa credit card is issued by Sutton Bank and bitcoin services and accounts are provided by NYDIG.

Sezzle (BNPL Firm) launched “Sezzle Capital” enabling their merchant customers to obtain working capital loans of up to USD $10M.

Facebook Pay is extending to third-party e-commerce sites as an online checkout payment option beginning with Shopify in August.

Payveris announced that their MoveMoney platform now delivers a real-time P2P solution.

This caught my attention as recent IPO filings increased considerably (especially on the bank side):
- Finwise Bancorp (Utah-based digital bank and fintech Sponsor Bank) filed to become a publicly traded BHC (Nasdaq: FINW). The preliminary Finwise S-1 shows they are looking to raise $50M.
- U.S. Century Bank (regional commercial bank) targets $40M IPO listing (Nasdaq: USBC).
- Southern States Bank filed to raise $35M IPO (Nasdaq: SSBK).
- Robinhood filed their Amended S-1 disclosing that they are seeking to raise $2.5B with a share price of $42 representing a reported valuation of $35B.
- MeridianLink sets terms for $300M IPO.

Still no shortage of funding:
- FTX (crypto exchange) raised a whopping $900M in Series B funding round with an $18B valuation – WOW!!!!
- Titan (retail focused mobile-first managed investment platform) raised $58M in Series B funding with a valuation of $450M.
- Artis (API driven consumer installment loan / merchant POS solution platform) raised $7M in Series A funding round.
- Dwolla (API enabled ACH and RTP payment platform) raised $21M in funding to be used primarily for international expansion and product development.
- Bolt (on-line checkout service) raised $333M in Series D round at a $4B valuation (approximately 5X the valuation in December).
- Paystand (Ethereum blockchain B2B payment platform) raised $50M in Series C funding.

Random Uncle Sean Stuff:

35 days until college football!!!
I was fortunate enough to watch Jeff Bezos’ rocket-launched Blue Origin space flight live on TV this week. It was really cool, but HOW DID BEZOS GET AHOLD OF TANNER MAYO'S HAT??? LOL!!!!!
Happy Birthday to me and Aunt Patty this weekend!!!! Little known fact that we share the same birthday. Same year too – but don’t remind her that she is 8 hours and 39 minutes older than me – BWAHAHAHA!!!!!

Uncle Sean's Update - 7/16/21

7/16/2021

Happy Friday!!!

Here is the Uncle Sean Update for 7/16/21:

This was AWESOME and made Uncle Sean smile – Congratulations to University of Tennessee at Martin for winning first place out of 35 competing universities at the CSBS 2021 Community Bank Case Study Competition. Check out their winning report - Analysis of TriStar Bank: Serving the Community During a Pandemic and Supporting Diversity, Inclusion, and Economic Fairness.
- University of Arkansas won Second Place with their report - Southern Bancorp Bank: Serving the Underserved Since 1986.
- Southeastern Louisiana University captured Third Place with this report on minority owned bank, Liberty Bank & Trust - Liberty: Financial Freedom for All.
  - Huge congratulations to ALL 35 Teams that participated in the competition! Uncle Sean is very happy to see such interest and great work coming from young people across our nation as we celebrate community banks and the critical role that they serve in our communities!!!! GREAT JOB to EVERYONE!!!!

The Big 4 Banks reported 2Q21 earnings this week. Without going into tedious detail (which I will do if left unsupervised for too long – LOL), the headlines at the 50,000 foot level are: 1) continued reserve release reflecting solid economic recovery with Consumer Segment charge-off’s and loss reserves mainly back to pre-pandemic levels – caution remains in industry specific commercial segments; 2) loan volumes are disappointingly flat especially weighed down by less consumer cc balances, but is widely expected to pick up in 2H21; and 3) debit and credit card purchasing volume has been huge. Here are the Big 4’s 2Q21 investor decks if you want to get weird (like me):
- JPM 2Q21 Earnings Deck; BOA 2Q21 Earnings Deck; Citi 2Q21 Earnings Deck; WF 2Q21 Earnings Deck

Apple is launching Apple Pay Later as a BNPL feature for any Apple Pay wallet purchase. Goldman Sachs is reportedly the lender for the platform. Note that this new offering is separate from the Apple Card 24 month payment plan (0% financing for iPhone and other Apple products only) as it is for ANY Apple Pay purchase. There are two different platforms for the BNPL platform – first is a four interest free installment plan payable every two weeks, and second is a longer payment plan (undefined as of yet, but presumed to be 12 months) with interest.
- For the record, Apple Pay is currently accepted at over 85% of U.S. retailers and anywhere that accepts contactless payments.

Two of Uncle Sean’s favorite top 10 Rock Star Sponsor Banks are making more headlines this week:
- Cross River Bank (these guys are CRUSHING it) is bringing Fly Now Pay Later airfare financing to the U.S.
- Serial acquirer and fintech sponsor Blue Ridge Bank announced a definitive agreement to acquire FVCbank in all-stock merger of equals transaction – check out the Investor Deck reflecting $306.6M purchase price with 2.1 year payback.

Square is the latest to announce a proposed bitcoin-focused DeFi platform. Although the new business unit has not been named yet, it will include Seller, Cash App and recently acquired Tidal businesses. You can read more about DeFi on Uncle Sean's 7/9/21 Update.

Discover is partnering and investing in Sezzle (BNPL firm) with a $30M investment to “integrating a buy now, pay later solution on the Discover Global Network. Further, a dedicated referral program will be implemented that introduced Discover credit and debit products to Sezzle’s user base.”

PROG Holdings, Inc. (NYSE:PRG), the fintech holding company for Progressive Leasing, announced the acquisition of BNPL firm, Four Technologies, Inc. – terms were not disclosed. Steve Michaels, CEO explained “Combining Four with Progressive Leasing and Vive Financial, our lease-to-own and revolving credit companies, builds upon our direct-to-consumer growth strategy and delivers an exceptional value proposition to retailers looking to offer their customers additional payment options.”

LendingClub (parent company to LendingClub Bank) settled with the FTC this week with an $18M payment for consumer remediation that does not include any admission of liability.

GreenSky (home improvement fintech loan facilitator) gets tagged with a $2.5M civil penalty by the CFPB and is being required to refund or cancel up to $9M in unauthorized loans. If you really want to, you can read the entire 5 page CFPB Consent Order here. GreenSky entered into the agreement with the CFPB without admitting any liability or wrongdoing.

Congratulations to Blend Labs who began trading today (NYSE: BLND). Shares jumped 11% at the open to $20 giving BLND a valuation north of $4B!!!

Fintech funding updates are smoking hot this week - and includes a slew of new rounds for cybersecurity solutions:
- Arctic Wolf (cybersecurity firm for SME’s) raised $150M in Series F funding.
- Virsec (cybersecurity platform using real-time integration to prevent “zero-day” cyber hacks) raised $100M in Series C funding round.
- AttackIQ (cybersecurity “breach and attack simulation solution” startup) raised $44M in Series C funding to ramp up international expansion.
- Cybereason (cybersecurity tech platform) raised $275M in Series F late stage crossover financing round led by Liberty Strategic Capital founded by Steve Mnuchin, former U.S. Treasury Secretary.
- Keep an eye on this one…. Stytch (an API-first passwordless authentication platform) raised $30M in Series A funding. The article mentions that “Stytch was founded by two former Plaid employees, Reed McGinley-Stempel (CEO) and Julianna Lamb (CTO), who built user authentication features that ‘millions’ use to connect their bank accounts to apps like Venmo, Coinbase and Robinhood. The company was founded on the premise that passwords are no longer secure, and make companies easy targets for hackers and expose them to account takeover risk.”
- Remote (international HR, payroll, and compliance platform for businesses) raised $150M in Series B with a valuation just north of $1B.
- Jasper Card (fka Creditstacks) raised $34M in Series A with an additional $100M in receivables financing. Valuation was not disclosed but Jasper intends to use the funds to “grow its AI technology to further develop its underwriting model and introduce a new line of financial services.”
- M1 Finance raised $150M in Series E with a valuation of $1.45B and is M1’s fourth funding round in 13 months. Last $75M Series D was just four months ago.
- Railsbank (BaaS neobank) raised $70M in Series B funding. Valuation was not disclosed, but was “hinted” at the high hundreds of millions per the article. Proceeds to be used for international expansion, presumably U.S. as part of their Credit Card-as-a-Service platform (Railsbank is based in London).
- Cardless (Credit Card-as-a-Service platform for digital cobranded card issuance) raised $40M in Series B funding round.
- Rumored for months now, Revolut (UK Neobank with an expanding presence in the U.S.) finally announced that they raised $800M in Series E funding with a stunning $33B valuation – HOLY COW!!!!! The previous Series D round was last July 2020 at $580M with a valuation of $5.5B. Revolut plans to use the funds to expand U.S. presence and product offerings (recall where Revolut has submitted a draft application for FDIC insurance and California DFPI bank charter in March 2021).
  - A quick look at their recently released 2020 Annual Report shows $306M USD ($222M pound sterling at 1.38 USD conversion) in top line revenue on page 38….. Which is a valuation of about 108X revenue – DANG!!!!!! Also of note, Net Loss before OCI is $284M USD ($206M pound sterling) and appears to be getting worse – top line revenue grew by 34% in 2020 while losses increased 93% (yep – that is going the wrong way). I’m confident that the VC firms involved in the funding know way more than I do regarding Revolut’s future and scalability, but that sure looks expensive!

Random Uncle Sean Stuff:

42 days until college football!!!!
Aunt Patty and I found the tiniest baby scorpion I have ever seen last night after dinner. That little baby was about the size of a match head. Of course we now have to burn the house to the ground, but I digress. LOL!!!

And….. DAD JOKES – They’re Baaaaack!!!
- What did 50 Cent do when he got hungry? 58!
- On March 10, 1876 Alexander Graham Bell makes the first phone call ever…. And moments later he was notified that his car’s extended warranty had expired.
- Last week while buying bird seed, the cashier was shocked when I asked how long it takes for the birds to grow once I plant them….
- I accepted a position as the head of Old McDonald’s Farm. Now I am the CIEIO!!!!
- Staring curiously at a jar of Molasses……. So what do they do with the rest of the mole?
- I’m not necessarily stating that I am Batman “per se”, but….. Batman and I have never been seen together… Just sayin’….!!!!

Uncle Sean's Update - 7/9/21

7/9/2021

Happy Friday!!!

Fintech, Banking, Data – It’s what we do! Here is the Uncle Sean Update for 7/9/21:

As part of the sweeping Executive Order on Promoting Competition in the American Economy targeting antitrust and corporate consolidations, the White House is calling on the DOJ, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency to “update guidelines on banking mergers to provide more robust scrutiny of mergers.” Reuters has a good summary of the banking merger emphasis here. It will be interesting to see how the rest of the year shakes out for bank M&A.

Chime gets the negative press award for the week (I bet Vlad at Robinhood sent Chime a thank you card - LOL). It is being reported that Chime is generating a high rate of complaints with 920+ complaints with the CFPB since April 15, 2020 – many of which involve accounts being closed against customers’ will. Hey – I get it. Mistakes happen (see Chase customers become instant billionaires after “technical glitch”). Statistically speaking, 900+ complaints just doesn’t seem like that big of a deal considering Chime’s 12M+ customers – although we all know that one is too many. HOWEVER…… When you look at the BBB complaints (according to the article) – Chime BBB complaints outnumber Wells Fargo (4,439 to 3,281 respectively); and we all know WF has a stellar track record when dealing with retail customers (sorry – I just threw up in my mouth a little bit)….

Compound launches Compound Treasury as a DeFi-as-a-Service (yes, that’s a thing now) function. This is specifically targeted to enable “Neobanks, Fintech startups, and other large holders of U.S. Dollars to access the interest rates available in the USDC market of the Compound protocol” so that they can fund their own high-interest / high-yield account offerings per this press release on Medium. I see two good things here: 1) Compound does a good job of disclosing they are not a bank and these are not bank accounts, and 2) Limiting to stablecoins takes the crypto “as a currency” volatility risk off the table. However, I am more than just a little worried about fintech companies using this protocol to fund a high-yield consumer account (what could possibly go wrong – sarcasm). Uncle Sean is generally not a proponent of big government or increased regulatory scrutiny, but I think regulatory attention is certainly needed in the DeFi Interest environment. Full disclosure – I think it is very cool, but I worry that many people don’t understand the potential risks sometimes – more below:
- The consumer DeFi Interest market already worries me as the lure of high yield (5%) interest on USD is too much to pass up for many - but the risks are real as USDC is not FDIC or SIPC insured. Monie is the latest in a line of "high yield" consumer-facing apps like Eco.com and Linus. They're being transparent about how the return is made but not about the risks. Once you send your USD to them, they lend it out to other crypto-counterparties that “generally speaking” need liquidity but can’t get it from a bank.
- So if we are being fully transparent, you are actually lending money to a corporate obligor (to which you probably did not do any financial diligence on – red flag number one) that has unknown counterparties (red flag number two) that are high risk (red flag number three). While we are all being honest, 2.5% - 8% is a pathetic return for a high-risk / non-investment grade loan (call it what it is) as an unsecured creditor to a corporate obligor with unknown counterparties…. OUCH!!!!
- To be fair – I do see warnings and disclaimers from many firms (see SoFi warning on crypto trades as well as BlockFI disclaimer of “Digital currency is not legal tender, is not backed by the government, and BIA accounts are not subject to FDIC or SIPC protections”), but I also see blogs stating why I don’t need FDIC insurance (not to point fingers….. but… See Eco.com - why people don't need FDIC insurance - SMH).
- At the very least, there should be HUGE “IN YOUR FACE” disclosures (not #2 italic font hidden somewhere) such as “not a bank, not a bank account, no FDIC or SIPC insurance, this is a high-risk investment suitable for accredited investors only, 100% of your funds are at risk of loss, etc., etc.”

It was a good week for de novos – Congratulations to First Women's Bank in Illinois and Community First Fund Federal Credit Union in Pennsylvania on your new charters!!!!

Immediate (EWA fintech firm) signs Automatic Payroll Systems, Inc. (APS) for Immediate’s EWA / on-demand payroll access solution.

Socure (online ID verification and fraud platform) announced the introduction of the first identity verification and fraud solution built specifically for the BNPL industry.

BlockFI releases their long awaited Visa Credit Card with Bitcoin Rewards with an added feature that allows you to pay your bill with stablecoin such as USDC.

Circle, a Boston-based provider of payment and treasury infrastructure solutions for online businesses, agreed to go public at an implied $4.5 billion valuation via SPAC merger with Concord Acquisition Corp. (NYSE: CND). That’s a stout valuation!!!! You can geek out (like me) even more by checking out their Investor Deck.

Blend Labs filed their S-1 this week to issue 20 million shares at $16-$18 range which would give them a $3.7 billion market value (priced in the middle). Blend will trade on the NYSE: BLND and is expected to raise up to $400M from the IPO.

Wise (fka TrasferWise) makes strong debut on London Stock Exchange reaching an approximate $11B USD Market Cap.

Funding continues to run hot:
- Mercury (neo business bank for startups) raised $100M in Series B with a valuation of $1.6B.
- Zerion (DeFi) raised $8.2M in Series A.
- Unit21 (no-code fraud prevention platform) raised $34M in Series B round.
- LoanPro (API enabled loan management platform) raised $100M equity financing.
- Willa (payment platform and receivable financing firm for contractors) raised $18M in Series A funding.
- Gig Wage (commercial platform to manage contractor payments) raised $3.25M and hires Clarisa Lindenmeyer as its Chief of Staff and Chief Brand Officer.
- Cross River is in early discussions with investors and looking to raise $200M at a $2.5B valuation.
- Yep, I read it too – Stripe has reportedly hired Cleary Gottlieb Steen & Hamilton LLP presumably as a legal adviser on its early-stage listing preparations. But don’t freak out too quick – the article states that an IPO would not happen this year.

Random Uncle Sean Stuff:

49 days until college football!!!!
It’s been raining so much here in Texas that the catfish are starting to climb trees – LOL!!!! But I’m not going to complain about getting rain in July!
Dave and Tanner made a serious tactical error this week…. They left town on a road trip and Uncle Sean has the keys to the ranch - WOOHOOO!!!!

Uncle Sean's Update - 7/2/21

7/2/2021

Happy Friday!!!

Happy Independence Day; and welcome to the beginning of the 2nd half of 2021 (where has the time gone?)!!!! Here is the Uncle Sean Update for 7/2/21:

It seems like for years now, Robinhood never disappoints in providing a consistent feed of PR nightmares and compliance disasters for themselves… This week proves to be no different as Robinhood gets the dubious distinction of “winning” the largest-ever FINRA penalty totaling $70M due to outages and misleading customers back in March 2020. Congrats???
- FINRA slapped Robinhood with the $70M penalty consisting of a $57M fine plus $13M in restitution to thousands of clients. You can read the full FINRA news release here. To Robinhood’s credit, the same day the fine was announced, Robinhood responded by announcing enhanced support staff now totaling 2,700 (3X increase from March 2020), as well as additional in-app educational resources, supervisory structure improvements, increased options supervision, and additional legal / compliance staff. Uncle Sean applauds Robinhood’s growth and what they have been able to accomplish, but sometimes the old tech mantra of “run fast and break stuff” doesn’t mix well with a highly structured regulatory compliance environment.

But wait, there’s more!!! Robinhood gets double coverage from Uncle Sean as the highly anticipated Robinhood S-1 was filed this week and plans to trade on the Nasdaq under the symbol “HOOD” (I love it). While growth rates have been stellar, the Risk Factors section is loaded with worries (73 pages long – WOW); as well as the Legal Proceedings section (pages 196 – 201) covering cybersecurity, anti-money laundering concerns, and many other ongoing regulatory issues – not to mention Payment for Order Flow (did I mention that the Feds recently seized Robinhood CEO’s cell phone as part of the GameStop trading probe…). Of particular note is that the $70M FINRA settlement does not relate to the ongoing FINRA investigations related to the early 2021 trading restrictions / outages / etc… CNBC has a great summary here so I won’t bore you with the financial details…..
- Okay – maybe just one minor financial detail (cough, cough - LOL)…. The roughly $1.5B cost in 1Q2021 related to meeting emergency capital / liquidity requirements during the “Reddit Meme Stock Craze” in early 2021 resulted in a Net Loss of $1.4B and devastated Robinhood’s Total Stockholder’s Equity to a negative $1.49B as of 3/31/21…. OUCH!!!! Oh, and they mention that there are no assurances that this will not happen again….
- Again, Uncle Sean believes in Robinhood’s overall mission to democratize finance for all; and I love the growth story - I just hope they can get it right on the compliance side and get out of the litigation pit.

Take a look Gusto – they are a payroll and benefits platform with the added benefit of an embedded finance solution equipped with debit card, savings account, and wage advance loans. Many folks I talk to consider payroll to be the last business payments vertical set for disruption. Well, this week, Gusto announced Gusto Embedded Payroll via API which allows any B2B organization to embed and customize payroll directly into their own software solution – specifically naming platforms that serve “small and medium businesses: vertical SaaS, business operations, fintech, neobanks, and more.” Very cool!!!

While the Fed is busy looking into a US CBDC, Randal Quarles (Vice Chairman of Supervision for the Federal Reserve and the Chair of the Financial Stability Board) abruptly threw a proverbial “bucket of cold water” on the US CBDC hype and warned that the potential benefits of CBDCs are unclear and a Federal Reserve CBDC could pose significant and concrete risks. However – he is not a “crypto hater”, he is just skeptical of the benefits of a fed issued CBDC. He actually stated “a global US dollar stablecoin network could encourage use of the dollar by making cross-border payments faster and cheaper, and it potentially could be deployed much faster and with fewer downsides than a CBDC.” By far, my favorite was when he specifically mentioned enthusiasm for novelty and fear of missing out “like that year in the 1980s when millions of Americans suddenly started wearing parachute pants.” You can read his full speech here.
- Full disclosure – Uncle Sean had a pair of red parachute pants back in the early to mid 80’s and they were AWESOME!!! LOL!!!!

Last week’s news - All 23 Banks that participated in the Fed Stress Test (this is me yawning) easily cleared minimum risk levels (CET1 of 4.5% for the real finance geeks out there like me). Which gives way to this week’s results – the largest U.S. banks announce huge dividend increases and share buy-back plans.
- So basically, we have relegated the Dodd-Frank Stress Test into nothing more than a federal greenlight for stock market dividends and share repurchase programs…. Hmmmm….

PayPal makes in-store payments push as it launches Zettle POS reader in the U.S. – great timing too as the economy fully opens up post-pandemic. We all know PayPal as a leader in the online and mobile payments space, but many of us (in the U.S. anyways) forgot about their acquisition of Swedish firm iZettle for $2.2B a couple of years ago. It’s not just a POS system, it is a fully integrated “digital POS solution designed to help small businesses manage sales, inventory, reporting and payments across all channels and in one place.” PYMNTS has a good write-up here.

Notable funding updates this week (follow the money):
- Zest AI (alt credit underwriting software) raised $18M capital injection led by VyStar CU, First National Bank of Omaha, and Northgate Capital.
- Chainalysis (blockchain tracking firm) raised $100M in Series E funding round at a valuation of $4.2B. Chainalysis is in the super-hot blockchain tracking space due in large part to crypto’s role in ransomware. Chainalysis helps “banks and law enforcement track illicit funds moving across public blockchains. Thanks to this so-called blockchain analysis, U.S. authorities were able to seize much of the bitcoin paid by Colonial Pipeline as ransom to the DarkSide hacking group.”
- Marstone (digital wealth tech / RIA firm) raised $5M in Series A funding.
- Orum (API / machine learning platform that accelerates ACH clearing while reducing ACH risk between banks) raised $56M in Series B funding round. This is only three months after their $21M Series A round - understandably due to the volume of transactions being conducted with Orum growing at 100% each month.
- Noname Security (API security platform) raised $60M in Series B funding. Yes, that is really their name – LOL!!! Check them out at nonamesecurity.com. As API’s continue to rule the world (think “super app”), API security leaks are a real issue (see Experian API Exposed and Peloton API Leak).
- Daylight (LGBTQ+ Challenger) raised $5M Seed funding round.
- Kikoff (credit builder) began operations and disclosed $30M in Series B round for total funding to date of $42.5M.
- Accept.inc (mortgage lending platform that creates all-cash offers) announced $90M in debt and equity funding to expand operations – currently only available in Colorado.
- Karat Financial (business / freelance CC platform) raised $26M in Series A funding.

And here is the last thing I would like to leave you with this week as Uncle Sean is a HUGE proponent of financial literacy especially in our K-12 schools… “Wealth does not create financial literacy, rather it is financial literacy that creates wealth and ultimately financial independence.” – Uncle Sean 😊 That just might become a new tag line!

Random Uncle Sean Stuff:

56 days until college football!!!!
The Green Apple Flavored Licorice that they sell at Tractor Supply should be listed as a controlled substance because Uncle Sean is completely addicted to it!
Have you ever been watching a 5 minute YouTube tutorial only to find yourself 5 hours later watching videos on how to teach a giraffe to sing (asking for a friend)??? I really need to get out of the house more often – HAHAHAHA!!!!!
Headed over to Tanner’s again this weekend for some serious Independence Day festivities, great food, and much needed quality time with family and friends – maybe even catch a catfish or two (I love those hybrid blue cats in his lake)! Can’t wait to be the first one to say, “Dang, it’s hotter than the 4th of July out here” – LOL!!!

Have a GREAT Independence Day Weekend and please stay safe!!!

Uncle Sean

Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis

FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.

Uncle Sean's Update - 6/25/21

6/25/2021

Happy Friday!!!

Here is the Uncle Sean Update for 6/25/21:

The House voted 218-208 to overturn the “True Lender” rule (following the same vote from the Senate back in May) and now heads to President Biden’s desk where he is expected to sign it into law. Bloomberg Law has a good summary here; and The Hill also has a good write-up covering both sides of the issue.

Wyoming Deposit & Transfer Corporation (WDT) is the latest institution to receive a Special Purpose Depository Institution charter (SPDI) - custodial services for tokenized assets and digital currencies. This is the third institution to receive the Wyoming SPDI charter following Kraken and Avanti.

Walmart announced that they are converting the Walmart MoneyCard from a prepaid GPR to a normal debit card (still issued by Green Dot)… Yes, I am just as confused as you are; and maybe this is by design – to keep us all scratching our heads until they reveal “the world’s greatest super app…” Let’s recap recent events… Recall back in January when Walmart announced they had partnered with Ribbit Capital to create a new fintech startup. Then came the poaching of strategic banking leadership from Goldman Sachs. Don’t forget the trademark filing for the name Hazel offering a full suite of banking services. Not to mention the Walton family ties from Arvest Bank. Adding in to the mix the existing services / relationships with Woodforest Bank, American Express, NetSpend, PayPal, MoneyGram, and many others…. It definitely makes Uncle Sean wonder if this is organized chaos by design, or just a complete damn mess??? LOL!!!

Zelle continues to make headlines as Syracuse Fire Department Employees FCU becomes the 1,000th institution to offer Zelle.

Fifth Third announced the acquisition of Provide, a fintech serving healthcare practices nationally. Provide originally granted loans to enable providers to start, buy or expand healthcare practices, and it has since grown to offer bank accounts and payments services. Looks like Fifth Third now has a Direct Bank (i.e. digital branch / digital brand) in competition with the likes of BankMD (TransPecos Banks) and Laurel Road (KeyBank).

Wealth management fintech Stash announced their acquisition of PayGrade, a financial literacy platform for K-12 students to develop money management skills (a very worthy concept that gets two thumbs up from Uncle Sean).

Cross River Bank makes headlines again this week by acquiring PeerIQ, an end-to-end platform for marketplace lending in the consumer credit sector. Check them out at PeerIQ.

Here is an update that is really cool for all my blockchain superfreaks out there (you know who you are 😊; and Uncle Sean loves all of you) – Goldman Sachs began trading on JPMorgan's repo blockchain last week. GS swapped a tokenized version of a United States Treasury bond for JPM Coin, JPMorgan’s dollar-pegged stablecoin. Mathew McDermott, global head of digital assets for Goldman Sachs’ global markets division, went on to state that smart contracts on the blockchain enable the collateral and cash to interchange simultaneously and immediately, and this is a big step up for the repo market, specifically “We pay interest per the minute. We firmly think this will change the nature of the intraday marketplace.”

Fiserv has partnered with NYDIG and California-based First Foundation Bank to allow financial institutions of all sizes to enable their customers to buy, sell, and hold bitcoin through their bank accounts. American Banker said 100 small banks have already signed up.

Bakkt (digital wallet and crypto trading app) is now offering a fully virtual Bakkt Visa Debit Card allowing users to “spend bitcoin and cash (USD) funds from their Bakkt App account right away, without having to first convert their bitcoin or wait for a bank transfer from a separate Bitcoin wallet to their bank.”

Funding remains crazy strong:
- VC firm, Andreessen Horwitz announced the launch of their massive $2.2B Crypto Fund targeting capital deployments across blockchain and digital asset start-ups.
- Lendbuzz (AI based auto finance platform) raised $360M investment including $60M Series C.
- Lower (home finance platform including a high yield savings account through Evolve Bank & Trust) raised $100M in Series A funding.
- Donut (high yield savings with DeFi) raised $2M funding round.
- Securitize (digital assets securities firm) raised $48M in Series B funding.
- Majority (neo immigrant challenger) raised $19M in Seed funding.
- Ivella (couples banking app) raised $475K pre-seed funding.
- MOCA Financial (next-gen card-based payment platform) raised $3M in Series B funding round.
- Atom Finance (investment platform) $28M in Series B funding round.
- SmartAsset (marketplace advisor matching service) raised $110M in Series D funding bringing their total valuation to just over $1B.
- Deserve (digital credit card and rewards) raised $50M in Series D round.

Random Uncle Sean Stuff:

Headed over to Tanner’s this weekend to look at a new business intelligence tool we are playing around with – but more importantly performing a test run with guns, fireworks, and fishing poles as a primer for next weekend’s 4th of July festivities. Ahhhhh, life is good!!!!

Have a GREAT Weekend and please stay safe!!!

Uncle Sean

Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis

FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.

Uncle Sean's Update - 6/18/21

6/18/2021

Happy Friday!!!

Happy Father’s Day Weekend to all the Dad’s!!!!! Here is the Uncle Sean Update for 6/18/21:

It’s Fed Week!!!! Spoiler alert – nothing happened (again)…. Rates remain unchanged and the $120B per month bond buying continues. Nonetheless, Uncle Sean still geeks out on Fed Week every single time (I think it’s a Pavlov’s Dog type of thing for me – like when you hear the ice cream man coming down the street), I just can’t help myself!!! In regard to tapering the bond buying program, Powell said “You can think of this meeting that we had as the ‘talking about talking about’ meeting” – so we are still a ways off. Inflationary pressures are creeping up and the estimated timeline for potential interest rate hikes has accelerated to “maybe” 2023. CNBC has a good summary as always. If you want to channel your “inner Uncle Sean geek” here is the FOMC statement and the detailed Summary of Economic Projections.

I’m sure you saw it all week as did I…. The endless articles about Amex launches small business checking account…. I think all of the journalists forgot that Amex is, in fact, a bank; and surprisingly (sarcasm), banks sometimes offer checking accounts – LOL!!! A quick look at the FedFis Bank database (yes, that’s a shameless plug) shows that Amex has about $3 Billion in DDA accounts. Secondly, it’s not Amex – it’s Kabbage that has the business banking account (Amex acquired Kabbage last year) and they have had that product since July 2020. So nothing new here folks…

The Senate confirmed big tech critic and prominent antitrust scholar Lina Khan as Chair of the FTC.

Discover (a name that sometimes gets unfairly overlooked in the credit and payment arena) has signaled strategic interest in the crypto world by hiring Alexandra Prodromos for the newly created position of Product Manager of Blockchain and Digital Currency. Payments Dive has a good write-up here.

Check out Cross River Bank – these guys are a cutting edge Sponsor Bank and now they have launched a venture capital arm appropriately called Cross River Digital Ventures to invest and propel the next generation of fintech startups and technology pioneers.

Stripe launches Stripe Identity in the red hot online ID authentication space.

Velocity Solutions announced that CIBC Bank has selected Velocity's digital lending platform (Akouba) to support CIBC’s small business banking division.

Former PayPal executives launch Six Clovers, a decentralized cross-border payment network designed to connect banks, merchants, and payment providers to transact in digital currencies around the world by taking direct aim at Swift.

Verizon is now a fintech challenger bank (it just feels weird to say that out loud) as they announced the launch of Verizon Family Money mobile app with a prepaid GPR Visa debit card powered by Galileo and issued by Metropolitan Commercial Bank including a savings vault with the goal of creating financial literacy to kids.

Bank M&A activity is really picking up! A quick look at the FedFis M&A database (yep – another plug) shows 18 deals for June through June 18th including another credit union acquisition of a bank – see Lake Michigan Credit Union to acquire Pilot Bank of Tampa, Florida (which is Lake Michigan CU’s second acquisition of a bank). Also of note is the recently announced Liberty Bank acquisition (Utah ILC) by the fintech KMD Partners (the parent company of CreditNinja that offers high-cost personal loans ranging from 25% to 249%) – and is sure to draw criticism from consumer advocates in relation to the True Lender Rule and state usury laws.

Adyen (payment processing platform) gets a US Charter as a Foreign Bank Branch allowing them to operate in the US as a bank. This is interesting as it allows another entrance by a fintech (Adyen has a European Bank license) into the US banking system. In this same context, take a look at Credijusto – the first Mexican Fintech to Acquire a Regulated Mexican Bank, Banco Finterra. I wonder if they will be next to apply for a Foreign Bank Branch charter to operate in the US…??? If this becomes a new path for fintech entrants, then it certainly points towards a U.S. de novo process that is way too difficult.

Wise (fka TransferWise) formerly announced plans to go public via direct listing on the London Stock Exchange.

Funding continues to flow:
- Unit (BaaS fintech) raised $51M in Series B funding round. Valuation was not disclosed, but total funding to date is just shy of $70M. Unit also and announced the upcoming launch of Unit Go (coming this fall) that will allow companies to create live bank accounts and issue physical and virtual cards in minutes.
- Nymbus CUSO raised $5M Funding Round led by Curql.
- Splash Financial (digital lending platform) raised $44M in Series B funding round.
- Novo (neo business bank) raised $40.7M Series A funding round.
- Hello Alice (business capital firm) raised $21M in Series B round.

And last but certainly not least (this is just too good not to share), Joe Exotic aka “The Tiger King” announces NFT auction from prison!!!! So far the future is everything I had hoped it would be – LMAO!!!!

Random Uncle Sean Stuff:

Happy Father’s Day to all the Dad’s – now get out there and mow / fertilize the yard, change some light bulbs, wash the cars, and bbq / grill a huge meal for everyone on your day of recognition - LOL!!!! All kidding aside, we are planning a family fish fry (including my favorite - homemade onion rings) this Sunday and I am very excited!!!!

Aunt Patty and I made a crock pot roast this week that was fantastic!!! It was my late Grandma Teeny’s recipe (her name was actually Ernestean, but none of us could pronounce that when we were little). Place 4 beef bouillon cubes in the bottom of the crock pot, add sliced carrots and a few small whole onions, drop in about a 3lb or so chuck roast (whatever fits), pour in 3 or 4 cans of Coke (however much you need to cover the roast), and cook on low for 6 – 8 hours. I know it sounds weird, but the acidity in the Coke tenderizes the roast and it tastes amazing. You’ll know it’s done when you can twist a fork in it and the roast pulls apart easily. We served it with homemade mashed potatoes and gravy. ENJOY!!!!!!

Have a GREAT Father’s Day Weekend and please stay safe!!!

Uncle Sean

Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis

FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.

Uncle Sean's Update - 6/11/21

6/11/2021

Happy Friday!!!

Here is the Uncle Sean Update for 6/11/21:

Even though credit card loan balances are down (as well as CC utilization rates and percent usage of available balance), we are seeing the nations largest CC issuers placing bets that this was a temporary Covid trend; and are pushing out promo’s as the economy reopens and consumers return to travel, leisure, and hospitality industries. Here are some of the leading headlines from just this week:
- Wells Fargo announcing the launch of their Active Cash credit card with 2% cash rewards including $0 annual fee and 0% intro for 15 months.
- Citigroup fired back with the launch of their Custom Cash credit card with up to 5% cash back on eligible top-spend categories up to the first $500 each month, and 1% on all other purchases. Also includes a $0 annual fee and 0% intro for 15 months.
- Amex and Synchrony are among the bidders attempting to replace JPMorgan as the issuer of Amazon's co-branded credit card with a portfolio that is just north of $15B in loans.

CNBC had a great interview (7 min video) with SEC Chair, Gary Gensler where he states that rules need to be updated for 2021 technology. Specifically:
- Digging into Payment for Order Flow (Robinhood was mentioned) and the meme stock frenzy (Reddit, Gamestop, and Robinhood were all specifically mentioned)
- Gamification of trading – specifically via mobile apps (hmmm – who comes to mind here??? Thinking it starts with a Robin and ends with a Hood - LOL)
  - Oh – and somewhat coincidentally (yeah right), Robinhood has reportedly delayed their IPO again this week until sometime in July. No press is bad press??? Well….

El Salvador becomes the first country to adopt bitcoin as legal tender through a partnership with Strike (digital wallet company) to build out the digital infrastructure. Keep in mind that El Salvador is the smallest country in Central America (smaller in size than Massachusetts) and has an annual GDP of $27B in 2019. in context to US States, Vermont has the lowest annual GDP in the US for 2020 of $32.8B and California has about $3.1T GDP (as provided per Statista). Nonetheless, this will be interesting to watch as El Salvador also has an enormous 70% unbanked adult population.

Here cometh the Taxman…. The IRS is seeking a $32M budget for crypto tax enforcement with specific allocations of $3.34 million for IT specialists, $6 million for hardware and software, and $23 million for contractual services. As part of the new plan, they are seeking the services of external experts in the field of blockchain, cryptocurrencies, and cybercrime; and plans to build an internal dashboard for cryptocurrency and blockchain analytics called STRIKES.

Check out the Mass Fintech Hub launched by the Massachusetts Fintech Working Group and operated by FinTech Sandbox. Mass Fintech Hub is a public-private partnership “dedicated to making the Commonwealth a global leader in Fintech” - Crowdfund Insider has a good writeup here.

Dave is the latest fintech to go public via SPAC merger with VPC Impact Acquisition Holdings III, Inc. at a $4B valuation that includes approximately $375M in cash. Check out the Investor Deck showing 2020 revenue of only $122M, but a forecasted 95% CAGR through 2023 – DANG that’s stout!!!! Also reflected is incredible customer growth in the Dave Banking platform from 633K at Dec 2020 to 1.3M customers at May 2021.

Marqeta (Nasdaq: MQ) began trading this week. The IPO was priced at $27 late Tuesday (raising $1.2B), well above the $20 - $24 expected range per the S-1, before opening at $32.50 on Wednesday and closing at 30.52 creating a market cap in excess of $17B in their debut. It’s nice to see an IPO finally priced correctly. CNBC has a good video interview (5 min) with Marqeta CEO Jason Gardner on going public.

Here is another cool fintech – take a look at newly launched Save and their Save Debit Invest Card (SIPC spin on debit rewards). They match your spend dollar for dollar in a portfolio that aligns with your investment profile (stocks, bonds, or other assets). Customers don't keep the investments, but they do keep all the returns (minus the Save investment advisory fee of 0.59%) in the form of debit rewards. Returns are not guaranteed of course, but currently stating 2.99% average return (hypothetical back-tested returns from 2006) which beats any other debit or credit rewards platform. They also announced this week that they have made the first matching investments on behalf of customers debit card spend.

And the funding keeps pouring in:
- Reported as rumor two weeks ago, Klarna has officially raised $639M in equity funding from SoftBank giving them a “Holy $hit” valuation of $45.6B. Whoo-Ahh!!!! This makes them the largest fintech (by valuation) in all of Europe and the second in the entire World (behind Stripe). Klarna posted record annual revenue of $1.2 billion (USD) in 2020. However, losses also climbed 50% to about $109.2 million (USD) due to increased costs associated with its international expansion. Klarna’s 1Q21 Investor Deck states over 90 million global active users and 2 million transactions a day. US customer growth has more than doubled YoY to 17M in April 2021.
  - (asking for a friend) So what kind of mythical creature is a 45X Unicorn valuation…???? Is it a Supercorn? A Godzillacorn? Maybe a Jurassicorn? A Googleplexacornicus? Okay – I’ll stop now…. 😊
- Bench (SMB bookkeeping service) raised $60M in Series C funding round and launches Bench Banking with LendingClub Bank.
- Trulioo (global online identity verification) raised $394M in Series D funding round with a valuation of $1.75B.
- Airbase (corporate spend mgmt platform) raised $60M in Series B funding with a valuation of $600M. Airbase is an interesting fintech to me. They have a corporate card, bill pay, and accounting integration platform that has real-time reporting. When I hear the term “corporate card”, my brain always reverts to either a business credit card or a business charge card (either way, it is on the credit / lending side of banking). However, the Airbase Visa is actually a prepaid debit GPR platform issued by Sutton Bank. Slick!!!
- Kafene (BNPL targeting subprime market) raised $14M in Series A funding. In March 2021, Kafene was handling about $2M per month in merchandise volume. The company plans to use the new funding to “scale its existing lease-to-own financing business nationally, as well as to launch a direct-to-consumer virtual lease card.”
- Clair (EWA / instant pay platform for full-time employees and gig workers) raised $15M in Series A funding round. Valuation was not disclosed, but this Series A brings their total funding to date to $19.5M ($4.5M seed round last October).
- Blooma (CRE digital underwriting platform) raised $15M in Series A funding round. Per the press release, lenders on the Blooma platform “have reduced loan origination time by up to 75%, enabled 50% more transactions and achieved 4x reductions in origination and servicing costs. To date, the platform has analyzed over $12 billion in deals in the last 12 months and serves multiple commercial banks, private banks and brokers.” Pretty cool!!!
- Credit Sesame (PFM and credit builder app) raised $51M in growth capital as their Sesame Cash debit account surpasses 1M customers in less than a year from beta.

Random Uncle Sean Stuff:

Holy Cow – It’s HOT here in the Texas Hill Country!!! I see a San Marcos River tubing trip in the near future (with a subsequent obligatory visit to Herbert’s Taco Hut of course)! Ahhhh, just thinking of it makes Uncle Sean happy.
Due to popular demand - Dad Jokes are back:
- The first 5 days after the weekend are always the hardest.
- Why is it so difficult to eat a clock? Because it’s time consuming….
- Aunt Patty asked me why there was a pile of clothes in the floor next to the laundry basket…. Apparently, “I struck down a Jedi” was not a good answer.
- I watched a documentary about hydroelectricity last night…. Best Dam movie I’ve seen in a while…. It was Shocking…. It’s a Current documentary…. It Generated a lot of interest…
- When I was young I was poor, but after decades of hard work, I am no longer young.
- It was a sad and disappointing day when I discovered my Universal Remote Control did not, in fact, control the universe…. Not even remotely.
- I got laser eye surgery about a month ago but I still can’t shoot lasers out of my eyes. Am I doing it wrong or should I ask for a refund?
- And last but not least….. What do attorneys wear to work? Law suits!

Uncle Sean's Update - 6/4/21

6/4/2021

Happy Friday!!!!

It was a short but busy Holiday week; and we all had to cram a full work week into just a few days - LOL!!!! Here is the Uncle Sean Update for 6/4/21:

Overdraft fees have been taking center stage lately with many neo / challenger banks offering a “no fee” structure for overdrafts – not to mention the increased pressure from Capitol Hill (those hearings have been entertaining, if nothing else). Many banks, in general, are taking notice and making changes in response to customer retention concerns – but the truth is that many of the largest banks have had no-overdraft programs for years (although several have a minimal monthly fee structure).
- Ally Bank becomes the latest to cut all overdraft fees for their 3.6M accounts – which is impressive. To their credit, Ally had waived overdraft fees between March and July last year during the peak of the pandemic unemployment impact. They do not expect the fee waiver to be material to the income statement.
- Huntington Bank is taking a slightly different approach by launching Standby Cash which is a line of credit giving eligible customers immediate access up to $1,000 with no interest or fees if customers sign up for automatic payments (otherwise, a 1% monthly interest charge, 12% APR, applies to outstanding balances). Huntington estimates that this program may cost the bank up to $1M per month but will certainly create customer loyalty and potentially bring in new customers.
- Back in April, PNC Bank announced “Low Cash Mode” which alerts customer through the mobile app and grants a 24 hour waiver for fees. Initial pilot programs have shown a 60% discount on consumer overdraft fees.
- Frost Bank also launched an overdraft grace feature up to $100 in April.
- To be completely fair, many banks have had specific programs for years – Wells Fargo has Clear Access Banking, Fifth Third has Express Banking, Bank of America has Advantage SafeBalance Banking, Citi has Access Account Banking, and even JP Morgan Chase (Senator Elizabeth Warren’s favorite bank – LMAO) has Chase Secure.

I know you probably saw it, but here’s a short update on legal happenings related to the OCC Fintech Charter…. Nothing really happened – again - LOL…. All kidding aside, here are a few non-impressive updates in case you are having trouble falling asleep (punchline is that the fight continues):
- The three judges in the 2nd U.S. Circuit Court of Appeals reversed the 2019 lower court victory where New York Department of Financial Services argued (successfully at that time) that the OCC lacked the authority to issue such a charter.
  - It’s the same premise that we have heard several times on this topic. Since no such “fintech charter” has been granted by the OCC, and the NYDFS failed to prove that any harm has come to NYDFS, then there is no basis for the original 2019 ruling in favor of NYDFS. Here is the appellate court 43 page ruling if you really want to get weird.
- Also, as expected, the CSBS issued a statement stating that specific ruling was disappointing, and they are confident that the CSBS litigation pending in the DC District Court will determine that Congress has not given the OCC the authority to issue a national fintech charter. The CSBS also encouraged “the OCC to abandon its pursuit of the chartering of uninsured national banks.”

SoFi began trading this week (Nasdaq: SOFI). SoFi said in a statement that it raised about $2.4B from the transaction to fuel growth, expand its markets and develop new products.

It’s a date!!! Marqeta filed a second amended S-1 earlier this week and will commence trading on June 9 according to the Nasdaq IPO schedule under the symbol MQ. Shares are to be priced in the $20 - $24 range and values MQ at approximately $12B+.

Mission Lane (credit builder fintech) acquired Honeydue – terms were not disclosed. This is pretty cool as Mission Lane (the old credit card division spinoff from LendUp) helps consumers rebuild credit with their Visa credit card offerings. Now with the acquisition of Honeydue (PFM App for couples) that provides a Visa prepaid GPR debit card, Mission Lane becomes a full Neo / Challenger Bank and avoids the dreaded “single source revenue model”.

The Venture Center and FIS announce the ten growth stage companies to take part in the 2021 FIS Fintech Accelerator program. They include: Array, Atomic, Bankifi, BankLabs, Informed.IQ, Long Game, OakNorth, Railz, TaxStatus, and Vymo.

Kraken (cryptocurrency exchange) announced the launch of their mobile app designed for beginners to get into the buying and selling of 50+ cryptocurrencies 24/7/365 for U.S. customers in preset denominations ($20, $50, $100) or any custom amount. The press release also mentioned that Bitcoin can be purchased for as little as $10. The service is not available to New York or Washington state residents because of the "cost of maintaining regulatory compliance." PaymentsDive has a good write-up here.

Sezzle (BNPL) inks a 3-year contract with Target. Sezzle’s interest-free installment (BNPL) product “will be used in-store and across Target’s digital platforms, providing guests access to interest-free payment plans for purchases made at Target.”

ENACOMM and REDi are partnering together - ENACOMM will provide communication channels for REDi's alerts to all of its customers’ users, and ENACOMM will integrate REDi’s fraud prevention technologies into ENACOMM’s ViA® and Fraud Control Module offerings. REDi will also provide ENACOMM its APIs to enable ENACOMM to package and resell REDi’s debit, fraud and card control solutions as part of ENACOMM’s product suite spanning the voice, mobile, and digital channels.

And the FinTech funding continues:
- Circle (crypto-services firm) raised a massive $440M in financing. Valuation was not disclosed, but Circle said the funds will be used to drive market expansion and growth. The stablecoin has become the world's fastest growing dollar digital currency, now standing at $22 billion in circulation. USDC has grown by 436% in 2021 alone, and over 28,000% over the past 12 months.
- Truebill raised $45M in Series D funding round bringing the total valuation to $500M. This Crunchbase article states that since November, Truebill has grown at a rate of 3.5X YoY Revenue; and their “active user base grew from 1 million to 2 million and is now analyzing more than 200 million monthly transactions for more than $40 billion in monthly transaction volume.” Their last $17M Series C was just six months ago; and brings their total funding to $85M.
- MotoRefi (auto loan refinancing platform) raised $45M in Series B funding round. Valuation was not disclosed, but the company states 7x revenue and 5x volume growth YoY for 1Q21 and is on track to issue $1B in loans by the end of the year.
- Yieldstreet (alt investment platform) raised $100M in Series C and is on track to hit $100M in revenue for 2021.
- Synctera raised $33M in Series A funding round and plans to use the funds to accelerate their Banking-as-a-Service platform.
- Pinwheel (payroll API for direct deposit and VOE) raised $20M in Series A.

Random Uncle Sean Stuff:

It is starting to feel a little more like “normal” again as we begin to evaluate our post-pandemic world. Folks are traveling, going to conferences, and meeting in person with friends and family after a long, long 15 months of social distancing and isolation. Me and Aunt Patty got to spend a few days with her family this past weekend; and were able to spend time, laugh, and hug friends and relatives that we haven’t seen in over a year. It was nice.
Ahhhh – here are some “clothes dryer diaries” for you…. So our dryer died (of course with wet clothes in it)…. Me and Aunt Patty did some quick internet research and decided to bite the bullet and get a new one. We went to a large home improvement retailer that shall remain anonymous (but I can tell you that their colors are orange and white, and their initials are H.D.). We settled on our new dryer and with that old familiar feeling of being proud parents of a major shiny new appliance, went to see the associate to complete our purchase. To our complete dismay, we were informed that they do not stock appliances (except for a few “really cheap ones” – that is literally what she said) and it would take 4 – 6 weeks to get one delivered to us. What??? We called two other locations of the same retailer and they all three told me the same thing – they don’t stock major appliances. HOLY CRAP!!!! What are you supposed to do when the dryer goes out??? Wait 4 – 6 weeks??? Does anyone really forecast 4 – 6 weeks in advance of a dryer failure??? LORDY LORD!!!! Nice supply chain / product management (sarcasm)… Maybe this is just a temporary thing due to Covid (I still really like that store by the way)??? So I did what any other prudent adult would do (not that I am prudent per se, but I do pretend to be sometimes)… We went to another large home improvement retailer that shall remain anonymous (but I will tell you that their colors are blue and white, and their initials are L.o.w.e.’s) and found the exact same dryer (they had several in stock), purchased immediately, and they are delivering for free in three days. Shocking that local product availability still matters in a digital world (yes – more sarcasm) – LOL!!!!

Uncle Sean's Update - 5/28/21

5/28/2021

Happy Friday!!!!

Happy Memorial Day Weekend and congratulations to all the graduates as we also celebrate Graduation Weekend!!! Here is the Uncle Sean Update for 5/28/21:

Yep, I’m sure you heard about it….. Although originated by Bloomberg, pretty much every major news outlet covered the “007’ish clandestine” rumors related to hidden code within Square’s app detailing plans for checking and savings accounts (this is Uncle Sean yawning)…….. Hey – did everyone forget that SQUARE FINANCIAL SERVICES IS A CHARTERED BANK now???? Of course they will offer banking products and services - C’MON MAN!!!!!! LOL! My only question is why in the heck has it taken a year since the charter was granted?

HSBC (the 15th largest bank in the US per asset size of $195B as of 3/31/21) is exiting US retail banking to focus on international banking and wealth management. The press release stated that they will sell 90 branches out of 148 retail focused branches, HSBUS will retain about 20-25 and repurpose into international wealth centers, 35-40 will be closed. As part of the retail branch divestiture (pending regulatory approval; financial data as of 3/31/21):
- Citizens Bank is purchasing East Coast retail and online bank portfolio including 80 branches, 800,000 customer relationships, $9.2B in deposits, and $2.2B in loans.
- Cathay Bank is purchasing West Coast retail business including 10 branches, 50,000 customer relationships, $1B in deposits, and $800K in loans.

It certainly took long enough, but Joan Brown (80) was sentenced to three years and eight months in prison, five years of supervised release, and ordered to pay $1,016,900 in restitution by United States District Judge Joshua Wolson for her scheme to embezzle credit union funds for which she provided management services through a company which she co-founded (Service Center for Credit Unions). Joan had previously pled guilty in Sept 2020 to 6 counts of embezzlement of credit union funds and 11 counts of making false entries in credit union records arising from her embezzlement of more than $1 million over several years from six small credit unions that resulted in these CUs failure and liquidation by the NCUA – all of which were liquidated on 4/5/2016. If you want to geek out even more, you can read up on the NCUA OIG Material Loss Review report issued 2/23/17 that specifically details the fraud.

CNBC published their 2021 Top 50 Disrupter List. No surprise that FinTech dominates 5 of the top 10 with the likes of Robinhood, Stripe, Brex, Marqeta, and Chime.

Another CU acquisition of a bank (err – 2 banks actually, bringing the total YTD to 4). GreenState CU (charter 60269; $7.5B in Total Assets as of 3/31/21) in North Liberty, IA announced two bank acquisitions this week – Premier Bank (FDIC 12493; $383M in Total Assets as of 3/31/21) in Omaha, NE and Oxford Bank & Trust (FDIC 9260; $759M in Total Assets as of 3/31/21) in Oak Brook, IL. GreenState CU is no stranger to bank acquisitions as they acquired 7 branch locations from First American Bank in Iowa back in 2019 which drew the ire of the Iowa Division of Banking, but was ultimately settled.

Blue Ridge Bank, NA (NYSE: BRBS) sure grabbed my attention a lot this week!!! First as the Sponsor Bank for Aeldra (neo immigrant bank); Second - I learned that they recently became the new sponsor bank for Bridge (PFM Mobile App) as Bridge also moved from Mastercard to Visa Debit Card; and Third – in less than 4 months after completing the acquisition of Virginia Commonwealth Bank, the systems were consolidated and the new Blue Ridge Bank signs went up (congrats).
- Recall back in Feb. where we mentioned that Blue Ridge Bank was the first commercial bank to service both cash and Bitcoin through 19 of their ATM’s via partnerships with BluePoint ATM Solutions and LibertyX.
- Cutting edge tech, sponsor bank to fintech companies, AND an acquisitive bank…. You bet that Uncle Sean will be following Blue Ridge Bank!!!

Atomic (payroll API for direct deposit acquisition) partners with Welcome Tech to “enable direct deposits for the nearly 3 million account holders and 9 million community members of Welcome Tech, many of whom will gain access to bank accounts for the first time.” Recall about a month ago, we talked about Welcome Tech raising $35M in Series B and serving the Hispanic immigrant community through their PODERcard and Saber es Poder (knowledge is power) platform. Atomic is another great fintech with a single API to enable direct deposit that covers “over 165 unique payroll connections” and “approximately 65% of the U.S. workforce with a combined reach of 95 million workers.” It’s nice to see these firms partner together.

Acorns (wealth mgmt investing app) is going public via SPAC merger with Pioneer Merger Corp. The transaction values Acorns at approximately $2.2B and will trade on the Nasdaq under the symbol OAKS once the deal closes (expected later this year). Check out the Investor Deck where Acorns discloses 4M US subscribers and plans to grow to 10M by 2025, but is only expecting $126M top line revenue estimate for 2021 while 2019 and 2020 actual revenue was $44M and $71M respectively (yep - that’s another stratosphere multiple).

In case you are keeping score, Robinhood lost their bid to block the Massachusetts state regulators' case against them.

And more FinTech funding updates:
- Stavvy (digital closing platform in the mortgage and loan servicing space) raised $40M+ in Series A funding round. Valuation was not disclosed. Funding to be used to fund the company’s aggressive hiring initiative (headcount grew over 400% last year).
- Snapdocs (another digital closing platform in the mortgage space – seeing a trend yet?) raised $150M in Series D funding round bringing total funding to $260M and a valuation in excess of $1.5B.
- Resolve (spinoff from Affirm) raises $60M. The article refers to Resolve as a B2B Buy Now Pay Later (BNPL) platform. Not to belittle Resolve or their capital raise (which is very cool and impressive) – but isn’t “B2B BNPL” just a Factored Supply Chain Finance solution where the invoicing business gets paid quickly (i.e. factoring – for a fee of course) and the purchasing business is granted extended payment terms (i.e. supply chain finance)? I guess “B2B BNPL” just sounds a little more hip!!!
- Tilled (start-up payments facilitator “PayFac-as-a-Service”) raised $11M in Series A funding round. Valuation was not disclosed, but Tilled plans to use the funding to grow from 15 employees to 50 by the end of the year.
- SpotOn (SMB cloud-based integrated platform for POS, payments, brand building, data analytics, etc.) raised $125M in Series D funding launching them to a$1.875B valuation.
- Zeta raised $250M in Series C with a valuation of $1.45B.
- Forter (e-commerce fraud prevention) raises $300M in Series F funding for a $3B valuation.

And lastly – Uncle Sean almost always refrains from commenting on rumors until they become fact….. But….. CNBC is reporting that Klarna is close to finalizing another funding round valuing the BNPL firm just north of $40B led by SoftBank - CHA-CHING!!!! The exact amount of the funding round was not disclosed, but estimated to be less than the $1B that was raised just two months ago in March (that round valued Klarna at $31B).

Random Uncle Sean Stuff:

Phil Mickelson becomes the oldest major champion ever, at the age of 50, after winning the 2021 PGA Championship in spite of the 200-1 odds against him. I’m not really a golf fanatic, but this is a very cool story. CBS Sports has a good write-up here.

Only 92 more days until college football!!!! WOOHOOO!!!!!!
Congratulations to our son Parker as he graduates high school this weekend. Mom and Dad are proud of you young man!!!! There is a slight chance of rain (outdoor venue), but a 100% chance of some Momma tears from Aunt Patty.

Have a GREAT Memorial Day weekend and please stay safe!!!

Uncle Sean

Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis

FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.

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Uncle Sean's Update - 7/30/21

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Uncle Sean's Update - 7/9/21

Uncle Sean's Update - 7/2/21

Uncle Sean's Update - 6/25/21

Uncle Sean's Update - 6/18/21

Uncle Sean's Update - 6/11/21

Uncle Sean's Update - 6/4/21

Uncle Sean's Update - 5/28/21

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Bulletin

Want some truth? Let's talk. We love this game.

Sales: 512.960.0911Support: 682.218.1006

#TruthInBanking​#FedFisHasTheData

Sales: 512.960.0911
Support: 682.218.1006

#TruthInBanking
#FedFisHasTheData