Happy Friday!!! 
 
Sign up here to have the Uncle Sean Update sent direct to your inbox each week.  Here is the Uncle Sean Update for 10/15/21:
 
Straight from the get-go this week, Uncle Sean goes Off The Rails.  What is this ‘Off the Rails’ you ask???  This is my warning that an unsolicited op-ed will ensue; so you can skip it and scroll down if you like.  It is intended as opinion and designed to spark debate, thought, and maybe even change; and I always welcome all comments, criticisms, and questions (such as: ‘Were you drinking before positing this mess?’  Or – ‘How do you even hold down full-time employment?’  And one of my favorites – ‘Did your Mom regularly use recreational drugs while she was pregnant with you?’ LOL!!!).  So let’s get to it!!!! 😊

• Ole Mark Zuckerberg once again found himself in hot water with the Senate Commerce Committee (not a place you want to be) this week in response to the Facebook whistleblower testimony.  How does this relate to FinTech and Banking?  I’m glad you asked as this is a cautionary tale that we all should take note of as we move forward in this digital age…..
• We continually hear from industry ‘talking heads’ that “personalization” is critical to the success of community banks if you want to remain relevant.  The “personalization” barrage is persistent and on a daily basis.  I get it, but I also understand that financially speaking, banking is a model of scale.  So how do we accomplish personalization at scale (the dichotomy conundrum)?  Naturally we build this through AI and machine learning, sophisticated data decisioning platforms, algorithms, etc…  Are you listening bankers and fintech leaders?  How about the folks at LinkedIn, wealth mgmt firms, robo-advisors – what could possibly go wrong (sarcasm – just ask Zuck)????  I do believe in AI and machine learning in the evolution of finance – I’m just saying that we need to tread carefully and responsibly as to not shoot ourselves in the foot as we digitally scale our operations.
• And lastly to drive my point home….  SEC Chair, Gary Gensler gave a speech this week (disclaimer – not on behalf of the Commission or SEC staff) regarding digital analytics in finance and digital engagement practices (DEP).  Specifically pointing attention to robo-advisors and mobile investing platforms utilizing DEPs to optimize and enhance customer experience (CX) – questioning “what are they optimizing for?”  Is it for the investor returns, or for the firms returns…  Any time the SEC Chair talks about concerns related to the use of predictive data analytics, machine learning, and demand for data – we should probably listen.
• In summary, we all have a responsibility to monitor what is socially acceptable and understand that this is not static as societal norms change and evolve from generation to generation (whether we like it or not) – not to mention the continual evolution of technology and the role it plays within finance and banking.  How many times have you heard someone talk about harnessing the consumer data and purchasing info that is stored within a bank’s core processor?  How much is too much info; and how do we make sure we do no harm?  I guess it’s a good thing that us lowly humans still have a role to play in monitoring the recommendations of the machines….  Otherwise, enter Skynet (Terminator) – LOL!!!!

 
Now back to the rest of the Uncle Sean Update:

• Oportun (Nasdaq: OPRT) is the latest FinTech / Challenger Bank to withdraw their U.S. bank charter application joining the ranks of Monzo last week and Brex back in August.  In a statement, Oportun plans to refile for “a bank charter with the OCC and plan to amend elements of our charter application to reflect changes to our business.”
  • Probably did not help that Oportun has recently been under federal investigation by the CFPB with a “focus on the company’s legal collection practices from 2019 to 2021 and hardship treatments offered during the COVID-19 pandemic.”

 

• Real inflationary concerns are starting to mount as the Social Security Administration announced a 5.9% cost of living adjustment for 2022 – WOW!!!!!  For reference, this is the largest annual increase in 40 years; and 2021 SSA COLA was a meager 1.3%.  Additionally, the U.S. Bureau of Labor Statistics (BLS) released their Sept CPI Summary this week that showed a 5.4% increase for All Urban Consumers (CPI-U) over the last 12 months.  Yep, it’s starting to feel a little beyond “transitory” at this point – it’s time to get that Fed tapering machine going!

 

• Splitit (BNPL) announced a partnership with Discover to offer Splitit installment options to Discover Global Network Cardholders worldwide.

 

• StreetShares getting it done this week with the announcement that the StreetShares Atlas Program will be integrated with Fiserv core beginning in Q42021.  This gives Fiserv the added feature to allow financial institutions to manage the full SMB “lending lifecycle from digital document capture, underwriting, offer management and closing.”  Congrats!!!

 

• Mbanq (BaaS FinTech) and Temenos teamed up to offer Credit Union-as-a-Service (CUaaS) platform to enable US Credit Unions of any size to “accelerate their digital transformation and deliver innovative digital financial services and outstanding experiences to members.”

 

• Reuters reported that 96 advocates including the National Consumer Law Center have called upon the US CFPB to further regulate earned wage access products as a form of credit arguing that fronting money to workers ahead of payday poses unaddressed risks.

 

• Continuing the spirit of October being Cybersecurity Awareness Month – check out KeepMyBankSecure.com, a cooperatively produced and underwritten resource for North American independent banks and financial institutions to learn and stay informed of the latest in cybersecurity planning and strategy.

 

• FinTech funding ran considerably hot this week:
  • Shout out to our friends at Atomic (payroll API infrastructure) announcing $22M in Series A funding round – Uncle Sean loves these guys and it is fun to watch them grow and succeed!!!!
  • Productfy (BaaS / embedded finance) raised $16M in Series A finding round.  The company claims that with its platform, developers can “configure in hours, integrate in days, and go from idea to full stack deployment in as little as three weeks.”  The article goes on to state that “since July, the startup has seen 119% month over month revenue growth. It currently has eight clients, including HatchCard.”
  • Pomelo (credit based int’l transfers) raised $5M in Seed funding.
  • Alviere (embedded finance platform) raised $50M in Series B for a total funding of $70M since April.
  • Black Kite (third-party cyber risk ratings / vendor risk management) raised $22M in Series B funding.
  • Halo (structured investing platform for individuals) raised $100M in Series C to continue to revolutionize and democratized protective investing.
  • Shift5 (military and transportation fleet cybersecurity platform) raised $20M in Series A funding round to further protect critical U.S. infrastructure.
  • Bolt Financial (online checkout payments solution) raised $393M in Series D funding.
  • GoodLeap (POS home financing platform for sustainable improvements) closed an $800M investment round at a $12B valuation.
  • Celsius Network (crypto lending) closed a $400M investment at a $3B valuation.
  • Lively (HSA) raised $80M in Series C funding round.
  • Lendflow (SaaS embedded finance) raised $10.8M in Series A round.
  • Tala (digital lender offering micro-loans in emerging markets) raised $145M in Series E funding to expand international operations as well as launching crypto products for emerging markets.

 
 
Random Uncle Sean Stuff:

• Check out Captain James Tiberius Kirk (aka William Shatner) describing the Blue Origin spaceflight as the 90 year old sci-fi hero obtains U.S. astronaut status.  Pretty cool!!!!
• Special shout out to the entire FedFis Team as this was (err “still is”) a wild and crazy week!!!
  • We have QA going on for preliminary release of 3Q21 bank, credit union, and bank holding company reg data; as well as the release and summary updates for 3Q21 Fintech Analytics© and Direct Bank data.
  • Oh, and we have our annual FI FinTech Roundup conference next week in Fredericksburg, TX.
  • We have a new product launch that we are unveiling at our conference next week for Community Bankers and State Bank Associations – and it is SUPER COOL (I can’t go into any more detail yet or they will shoot me – LOL).
  • Not to mention ongoing video interviews with the FinTech Cowboys and business as usual!!!
  • DANG – we’ve been busy!!!!  😊

 
 
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.
​

Happy Friday!!! 
 
Sign up here to have the Uncle Sean Update sent direct to your inbox each week – EVERYBODY’S DOIN’ IT!!!!  😊  Here is the Uncle Sean Update for 10/8/21:
 
If the month of October wasn’t spooky enough, it’s fitting that it is also Cybersecurity Awareness Month so I thought it would be prudent to kick us off with a few facts:

• Feedzai (cloud-based financial crime management platform) released their most recent Quarterly Financial Report (nicely done report by the way) this week showing a 23% increase in online fraud.
• The Department of Justice announced this week the launch of the Civil Cyber-Fraud Initiative to combat cyber threats via “the False Claims Act to pursue cybersecurity related fraud by government contractors and grant recipients.”  The goal here is to further protect the security of sensitive information and critical systems from cyber threats.
  • The DOJ also announced the creation of a National Cryptocurrency Enforcement Team (NCET) to “tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors.”
• Recall the 9/24/21 Uncle Sean Update where we talked about critical infrastructure being targeted (Ag Banks pay attention) related to Crystal Valley Cooperative ransomware attack as well as the New Cooperative ransomware attack.
• And a quick reminder that all SEC has cybersecurity disclosure requirements for cybersecurity risks and incidents in the 10Q and 10K filings as well as an 8K filing for a material incident.  Harvard Law has a good article showing recent SEC fines and enforcement actions highlighting the SEC’s increasing scrutiny on cybersecurity disclosure policies and procedures.
• I know we covered this last week, but in the spirit of Cybersecurity Awareness Month we are going to mention it again – The American Bankers Association and more than 1,500 banks across the nation launched the #BanksNeverAskThat campaign to help consumers spot phishing scams.

 
Now back to the rest of the Update:

• Monzo (UK challenger bank) withdraws U.S. banking license application with the OCC.  Not overly surprising considering multiple years of "going concern" warnings from their auditors due to mounting losses; as well as a recent nasty FCA investigation regarding compliance with Money Laundering Regulations.
  • Did you know that 97% of all community banks in the U.S. are profitable (Source - FedFis Bank database, June 2021 YTD)?  Yes, even during a global pandemic banks are expected to be responsibly profitable as to not place an undue strain on the financial system as a whole – all while supporting their local businesses and consumers.  Challenger banks looking for a charter should take that ethos to heart!

 

• Target announced this week they are adding Sezzle and Affirm as Buy Now Pay Later options for Target customers.  Payments Dive has some good insights regarding BNPL uplift and market trends – but also references the Credit Karma report that states 34% of BNPL consumers have fallen behind on one or more payments; and 72% of those who fell behind on at least one payment said they believe their credit score declined as a result.

 

• Warning – Uncle Sean goes Off The Rails with an unsolicited op-ed here, so feel free to scroll down – LOL.  The United States Postal Service (USPS) is now piloting banking services…  Gee – what could possibly go wrong (sarcasm), considering this entity is woefully insolvent (check out the USPS financials losing $3B per quarter with a $74B negative equity position), has been operating at a loss since 2007, continually asking for gov’t assistance to meet unfunded employee health and pension liabilities, and flirting with irrelevance for several decades now.  I have an idea – let’s force feed banking services on them so we have an easy avenue to publicly bail them out….  They are already “too big to fail”, so let’s make them systemic as well.  Sheesh….
  • While the USPS and the American Postal Workers Union (APWU) are upbeat and positive about the pilot program, industry backlash has been swift, vocal, and fierce including rebuttals from:
    • Consumer Bankers Association, American Bankers Association, National Association of Federally-Insured Credit Unions, and the Independent Community Bankers of America.
      • Leave it to the government to create unity by completely pissing everyone off all at once – LOL!!!!!
  • NBC News and Banking Dive have good summaries if you want to read more.

 

• AvidXchange (AP and payment automation software) sets IPO terms to raise $582M by issuing 22 million shares at $21-$23. It would have a market value of $4.2 billion, if priced in the middle. They plan to list on the Nasdaq (AVDX).  Here is the recently amended S-1 if you want to dig deeper.

 

• So, back in May we covered Green Dot acquiring the Tax Refund Solutions business from Republic Bank & Trust (RBT) for $165M.  Well, looks like this deal has unraveled this week as Green Dot was unable to obtain the necessary Federal Reserve approval.  Now things are getting a little ugly…  Here’s what we know thus far:
  • Aug 4 – This  Republic 8K shows that Green Dot notified Republic that the Federal Reserve was “asking for information” about the transaction and that Green Dot intended to seek the Federal Reserve’s approval of or non-objection, as applicable, to the Sale Transaction. 
    • The Warning Shot - The RBT 8K filing also states that “Receipt of approval or non-objection from the Federal Reserve is not a condition to closing set forth in the Purchase Agreement.”
  • Oct 4 – Green Dot announced termination of the transaction stating they have been “unable to obtain the Federal Reserve’s approval of or non-objection to the Sale Transaction.”  Essentially undisclosed issues with their primary regulator.
  • Oct 5 – Republic announced in an 8K that they are suing Green Dot for Breach of Contract.

 

• Finzly (modern digital payments) has been on the move lately.  Their latest announcement state Coastal Community Bank (CCB is a significant sponsor bank) has selected Finzly's Payment Galaxy payment hub to power the payment needs of CCB’s fintech partners.

 

• Circle Financial is the latest to disclose an SEC investigation requesting documents and information  regarding certain holdings, customer programs, and operations – per this Amended S-4 filed on 10/4/21, page 193 under “Legal Proceedings; SEC Matters.”
  • Circle did not disclose the scope of the investigation, but it is widely assumed that it may be related to their Circle Yield product as the SEC continues its regulatory crackdown on crypto (recall the Coinbase Lend showdown with the SEC a few weeks ago).

 

• U.S. Bank launches crypto custody service.   CNBC has a very good summary and quotes  Gunjan Kedia (U.S. Bank Vice Chair, Wealth Management and Investment Services) as saying “Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class,” Kedia said in an interview. “I don’t believe there’s a single asset manager that isn’t thinking about it right now.”  To which Uncle Sean articulately responds with, “yup.” 

 

• Public (stock trading app / “neobroker”) is launching crypto trading on their app allowing users to trade and store crypto on the same app they use to manage their portfolios.  Initially featuring ten cryptos in the app [Bitcoin (BTC), Ether (ETH), Cardano (ADA), Dogecoin (DOGE), Litecoin (LTC), Bitcoin Cash (BCH), Stellar (XLM), Ethereum Classic (ETC), Dash (DASH), and Zcash (ZEC)], customers can set up a watchlist and invest with as little as $1.

 

• MoneyGram announced a partnership with Stellar blockchain to facilitate “near-real-time” money transfers using Circle’s USDC stablecoin with United Texas Bank serving as the settlement bank between Circle and MoneyGram .  Coindesk has a good writeup here.

 

• Bank of America is gaining ground by taking a page from the FinTech playbook.  BofA’s Life Plan (PFM planning feature) now has 5 million users one year after launch.  Also of note is BofA’s Advantage SafeBalance entry-level subscription based, no overdraft fee bank account that now has over 3 million accounts.

 

• Upstart (alt AI-enabled lending platform) announced the launch of Upstart Auto Retail software which is the evolution of Prodigy Software, acquired by Upstart in April 2021.  The cloud-based solution enables a superior car buying experience for both consumers and dealerships including AI-enabled financing and access to Upstart-powered auto loans.
  • Just in case you are wondering, Upstart stock price (Nasdaq: UPST) is up about 600% YTD through 10/8/21 – DANG!!!

 

• Notable FinTech funding updates for the week include:
  • Copper (teen banking app) raised $9M in additional Seed round for a total of $13.3M ($4.3M was raised last year).  Copper is touting over 350K accounts and a trajectory of 70% growth month-over-month – HOLY COW!!!!
    • Additionally, part of the company’s mission is to incorporate financial education into its offering so that teens are not just able to spend money, but also better manage it.  Copper built in financial tips (appropriately dubbed “cheat codes”) into the app aimed at helping teens “learn the essential money lessons they’ll need throughout life” – that’s fantastic!  Uncle Sean is a HUGE proponent of financial literacy especially in our schools. 
    • A quick glimpse at the FedFis FinTech Analytics© platform (yep – that’s a plug) shows this is a Mastercard debit card issued by Evolve Bank & Trust and Synapse is the Program Manager.
  • Otto (leverages car equity for loans) raised $4.5M in Seed funding.
  • Modern Treasury (business payments platform) raised $85M in Series C funding round at a valuation in excess of $2B.
  • Playbook (tax PFM app for high earning millennials) raised $5.6M in Seed round.
  • Orca Security (cloud security platform) extends Series C to $550M (net increase of $190M) with a 50% valuation increase in only seven months to $1.8B.
  • Tekion (automotive retail cloud SaaS platform) raised $250M in Series D with a YoY valuation increase from $1B to $3.5B.

 
 
Random Uncle Sean Stuff:

• AHHHHH - It’s OU - Texas week!!!  One of the biggest college football rivalries of all time!!!!!  This will be the 117th meeting between the two storied programs – check out the history!  Texas leads the series all-time at 62-49-5.  However, OU has been better than .500 since the end of World War II (widely considered “modern day” sports) and is 15-7 since 2000 (the Rivalry record is actually 14-7 post 2000 as the teams met twice in the 2018 season, the second matchup was for the Big 12 title where Oklahoma won, 39-27).  In the 2020 Red River Shootout, the game went into a heart pounding quadruple overtime (Uncle Sean might have had a mild stroke during that game - LOL) before Oklahoma sealed the deal with a 53-45 victory when OU’s Tre Brown intercepted Texas QB Sam Ehlinger's pass in the end zone.
  • ESPN’s “College GameDay” program will host their Saturday morning college football preview show from the Texas State Fair in Dallas, Texas, the neutral site of the 117th edition of the Red River Showdown between Oklahoma and Texas.
    • Will this be the year that the Longhorn mascot, Bevo, enters the transfer portal out of shame and embarrassment from continuing to falsely claim “Texas is Back”?  LOL!!!!
      • For those keeping score - since forcing Head Coach Mack Brown to “retire” after the 2013 season (to which the Longhorns had a 8-4 regular season with 7-2 conference before suffering a defeat against 10th ranked Oregon in the Valero Alamo Bowl), Texas has not had an 8 win regular season with the lone exception of the 2018 season (9-3)….  However – New Head Coach Steve Sarkisian has the Longhorns out to a 4-1 start with a solid team, big receivers, and a respectable running game.
    • Or will this be another episode of the Sooner Schooner with a crash and burn – okay it didn’t burn, but they did crash!  Thankfully everyone was okay.
    • Oklahoma’s offense has certainly sputtered the early part of this season (eerily similar to last year), but there is no doubt in Head Coach Lincoln Riley’s ability to orchestrate a nuclear powered offense.  The Defense looks much better but seems to have shown a consistent weakness in losing the Tight End for big pass play yardage.
  • Do yourself a favor, check out these OU and TX hype videos released this week on Twitter – expand the screen to full size, turn up the volume as loud as it can go, and try not to get choked up!!!!
    • Texas - All Gas No Brake
    • Oklahoma - Legacy
    • And one quick 45 second neutral themed Red River Hype video
• And of course Uncle Sean has a few quick Dad Jokes for you:
  • Even if a bear puts on socks and shoes, he would still have bear feet…
  • Did you know that Bruce Lee had a vegetarian brother?  His name was Broco-Lee!!!
  • If Apple makes a car……   Do you think it will have ‘windows’???  Hahahahaha!!!! 

 
 
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.

Happy Friday and happy first day of the 4th quarter (WOW)!!! 
 
Don’t forget to sign up here to have the Uncle Sean Update sent direct to your inbox each week.  Here is the Uncle Sean Update for 10/1/21:
 

• In an abrupt shift in direction, Google is abandoning its ambitious plans to offer bank accounts dubbed Google Plex after two years in dev mode.  Bobby Button and I were just talking about Google Plex a few days ago and how it had seemed to have gone dark.  Google mentioned that they instead will now focus on “delivering digital enablement for banks and other financial services providers rather than us serving as the provider of these services.”

 

• Payfare announced a partnership with Stride Bank to offer real-time payments to fintech gig platforms / contract workers.  Full disclosure – Uncle Sean is a big fan of Stride Bank and what they are doing on the fintech / sponsor bank side.  Gettin’ it done in Enid, OK – I love it!!!!
  • This tells me a couple of things….
    • First, it looks like Stride Bank is integrated with The Clearing House RTP network – not an easy task to get certified by The Clearing House for direct integration, so congrats to Stride Bank!
      • Reminds me a little bit of the recent partnership between Cross River Bank and Dwolla for Dwolla’s RTP solution….
    • Secondly, a quick look into the FedFis FinTech Analytics© database (you bet that’s a plug) shows that Payfare is the payments infrastructure provider for Lyft and DoorDash regarding Instant / Daily Payouts for their contract workers (can’t really call it EWA since contractors are not “employees”).  Also while looking at our FinTech Analytics© database (yessir, I plugged it again - LOL), it doesn’t take long to connect the dots and see that the Lyft Mastercard Debit card AND the DoorDash (DasherDirect) Visa Prepaid GPR Debit card are both issued by Stride Bank.  So, not a coincidence that Stride Bank and Payfare are already intimately familiar with each other.  Definitely looks like a good partnership!

 

• Coinbase is rolling out a new direct deposit feature over the next few weeks.  It allows you to allocate as much or as little of your paycheck to Coinbase as you want.  The deposits can be used to make recurring crypto trades, spend on your Coinbase debit card (MetaBank Visa), or even convert your paycheck to crypto with no transaction fees.

 

• Mastercard announces Mastercard Installments – a BNPL program that enables “banks, lenders, fintechs and wallets the ability to offer BNPL experiences at merchants with flexibility across the entire acceptance network.”  The press release went on to reveal that Mastercard is working with “Barclays US, Fifth Third, FIS, Galileo, Huntington, Marqeta, SoFi, and Synchrony” to offer the BNPL program in the U.S.
  • PYMNTS.com has a good summary reminding us that “the direct connection (Finicity) will also use consumer permissioned data tied to debit or bank account credentials to provide ‘smarter loans’ – where insight into consumer cash flow determines repayment terms.”  Oh – and let’s not forget Mastercard’s existing customer base of 78 million merchant acceptance customers…..  Dang!
  • Recall the 7/30/21 Uncle Sean Update where we discussed the Visa Installments API driven BNPL solution.  Now, per this CU Today article, “even existing BNPL players could plug into Mastercard’s program, if they chose to, which could broaden their reach.”
    • Sure feels like this space is incredibly crowded now with the world’s two largest payment networks joining the fray.  Is this the beginning of BNPL commodity type pricing wars?

 

• And the more things change, the more they stay the same (or at least seem morph into the same offerings over and over)…..
  • Affirm (expanding from their BNPL beginnings) announced they are working on a feature to allow consumers to buy and sell cryptocurrencies directly from their Affirm savings account.
  • Upgrade (expanding upon their consumer lending base) is working on a BNPL offering with a twist.  Instead of focusing on a merchant checkout, Upgrade will apply purchases to their customers Upgrade Card and allow payoff terms of 4 months interest free.

 

• Fiserv announced new Fiserv campus in Berkeley Heights, NJ to serve as “a strategic center of excellence for technology and product innovation.”  The new fintech innovation hub will add approximately 2,000 new jobs and features a 428,000 square foot four story building. 

 

• Marcus surpasses $100B in deposits in just 5 years since launching – now that’s stout!

 

• And another Credit Union acquiring a Bank this week.  Dupaco Community Credit Union (Charter #64049; $2.62B Total Assets) to acquire Home Savings Bank (Cert #30248; $183M Total Assets).  A quick peek into the FedFis M&A database (I’m getting good at this plug game) shows that this is the 11th CU to buy a Bank so far this year following a blistering August where there were 5 CU deals to acquire banks.  This compares to 7 in 2020 and 16 in 2019.

 

• American Bankers Association and more than 1,500 banks across the nation kick off the #BanksNeverAskThat campaign to help consumers spot phishing scams.

 

• The Senate confirmed Rohit Chopra as Director to lead the Consumer Financial Protection Bureau as the industry readies for an “emboldened CFPB.”

 

• Wells Fargo paid another $72.6M to settle Justice Department lawsuit accusing the bank of “defrauding hundreds of commercial customers” regarding FX transactions from 2010 – 2017.  Roughly $35.3M is being returned to customers as restitution and the remaining $37.3M to be paid to the U.S. as civil penalties.
  • Wait – are WF fines and penalties even newsworthy anymore???

 

• Oops!!!!  Compound (DeFi staking protocol) accidentally sent $90M to users during an upgrade with no option for correction other than “please send it back and you can keep 10%”.  OUCH!!!!!

 

• Notable FinTech funding for the week:
  • Alloy (identity decisioning platform for banks and fintech companies) raised $100M in Series C funding round at a $1.5B valuation.  Alloy states that annual recurring revenue has tripled over the last 12 months and customer count has more than doubled to over 200.  Clients include top logos such as “Ally Bank, HMBradley, Brex, Marqeta, Gemini, Ramp and Evolve Bank & Trust.”
  • Rize Money (fintech infrastructure platform) raised $11.4M in Series A
  • Betterment (wealth mgmt and digital investment advisor) raised $160M in capital that includes a $100M credit facility and a $60M Series F at an estimated valuation of almost $1.3B.
  • Parafin (SMB online cash advance & growth capital firm) raised $34M in capital consisting of $4M in Seed and $30M in Series A funding.
  • Panorays (third party vendor cybersecurity and risk evaluation platform) raised $42M in Series B
  • Coalition (cybersecurity + cyber insurance platform) raised $205M in Series E funding at a $3.5B valuation.  That is 2X the valuation from their Series D just six months prior; and the company “continues to ride a wave of massive growth as it crosses $325M in run rate premium, an 800% increase over the prior year.”
  • Highnote (card issuing / Cards-as-a-Service) emerged from stealth mode with $54M in capital that includes Seed and Series A funding totals.
  • Ripple launched a $250M Creator Fund to back NFT projects on the XRP Ledger. 
  • Built Technologies (construction finance platform) raised $125M in Series D funding at a $1.5B valuation.
  • Zero Hash (digital assets infrastructure) raised $35M in Series C funding round.

 
 
Random Uncle Sean Stuff:

• Okay, so I tried my hand at a new dinner recipe this week.  Aunt Patty and I made seared Korean BBQ flavored salmon with brown rice and glazed mini carrots.  The salmon is super easy – just cut the salmon filet into strips about 2” – 3” wide and marinate in Korean BBQ sauce overnight in a sealed baggie.  We cooked it on the stove using a grated griddle pan on med high heat, about 2 minutes on each side – you’re shooting for medium rare, but with some cool looking grill marks.  Don’t forget to spray / coat the pan with oil (we used Avocado oil) so the salmon doesn’t stick, because it will.  When done we drizzled lightly with Sweet Soy Glaze and sprinkled with chopped green onion chives.  For the glazed carrots, we used 16 oz bag of mini carrots, 2 Tbsp butter, 2 Tbsp brown sugar, 1 Tbsp honey, and about ½ cup of water.  Mix everything together in a pan and bring it to a boil at medium high for about 6 minutes.  Turn down to low and simmer for about 6 minutes.  Then turn back up to med high heat until all the water is evaporated (about another 8-10 minutes or so) while stirring occasionally.  At that point the carrots should be tender and simply salt / pepper to taste.  We sprinkled pecan crumbles over the glazed carrots and served with the Korean BBQ seared salmon and brown rice.  It was amazing and I highly recommend it!!!!!   
• While we are on the topic of cooking, I’m reminded of what Mr. Robin Fussell recently explained to me - “the problem with cooking raw spinach is by the time it’s done, you can’t find it!”  Yep – LOL!
• And a few quick Dad jokes to kick off the weekend:
  • Don’t forget the infamous chef tip…  If you stir coconut oil into your kale, it makes it easier to scrape from the pan directly into the trash!  LOL!!!!
  • While at the store the cashier asked if I would like my milk in a bag – to which I replied, “no you can just leave it in the jug.”
  • And my personal favorite for the week…  Aunt Patty was shocked when she found out Uncle Sean is not a very good electrician – hehehehehe!!!!  😊

 
 
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.
​

Happy Friday!!!
 
FinTech | Banking | Data – it’s what we do!  Make sure to sign up here to have the Uncle Sean Update sent direct to your inbox each week.  Here is the Uncle Sean Update for 9/24/21:
 

• Right off the bat – I want to give a special shout out and huge congratulations to First Women's Bank for their Grand Opening and Ribbon Cutting Ceremony this week!  OUSTANDING!!!!! 

 

• It’s Fed Week!!!!  Feel free to scroll down while I geek out – LOL!!!  Spoiler alert – nothing happened….  Again…..  LOL!!!    
  • However, Chairman Powell did state that if economic progress continues "broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted."  As always, CNBC has a good summary.
    • Basically, over the last six months we have talked about “when” we might begin to talk about the taper.  Then we talked about “talking about” a potential taper.  Now we are talking about a “potential taper”, but nothing is confirmed yet.  Got it!!!!
      • All kidding aside – I do love this fully transparent Fed.  Uncle Sean feels that it is good for the markets as a whole – kind of a soft spoken “Mister Rogers’ Neighborhood” type of approach to monetary policy; and they have been telling us for half a year exactly what they are going to do.  I dig it.  Sometimes boring is good!!!!
    • If you really want to get your super-geek on, you can check out the published Summary of Economic Projections, the 54 minute press conference video, and the 26 page written transcript.  Oh – and here is the official abbreviated FOMC Statement and Implementation Note.

 

• Late last Friday, Coinbase conceded to the SEC by announcing on their blog that they have abandoned the proposed Coinbase Lend product (crypto lending platform) and will continue to work towards “regulatory clarity for the crypto industry as a whole.”

 

• First National Bank of Omaha launches Buy Now Pay Later (BNPL) solution.

 

• American Express partners with Extend to enable virtual cards for U.S. SMB's.  Basically, existing Amex business customers can log in to Extend’s card app and create virtual cards in as little as 5 minutes.

 

• There was a lot of public commentary from regulatory heads this week reiterating the need for regulatory oversite in the crypto world:
  • Acting OCC head, Michael Hsu, gave a speech to the Blockchain Association earlier this week (you can read the full report here).  ICBA published a good summary referencing the following comments (I’m guessing Hsu isn’t a fan of DeFi):
    • “The cryptocurrency and decentralized finance sector is replete with scams, innovations that do little more than increase trading, and few solutions for the real economy.”
    • “Some of those who will be hurt in the crypto space are the least likely to be able to afford it.”
    • “Stablecoins and other crypto instruments pose systemic risks.”  YIKES – the dreaded “S” word….!!!!
    • “Financial innovation should be anchored in purpose.”
  • SEC Chairman Gary Gensler continues to reiterate his stance on the need for crypto regulations in this interview with Washington Post Live.
  • But wait – there’s more!!!!  The White House announced Saule Omarova as nominee for OCC head to replace Hsu.  Many media outlets, including this Washington Post article, label Omarova as an outspoken critic to Wall Street, big banks, and crypto.  Oh boy!  The upcoming confirmation hearings should be fun – LOL!!!!

 

• The NCUA liquidated C O Federal Credit Union after calling the small $2.4M CU insolvent with “no prospect for restoring viable operations.”  Really wasn’t much of a surprise as they were placed into conservatorship back on Jan 5th and have been insolvent (negative equity position) all year.

 

• Robinhood announced on their blog a new crypto wallet feature that they will be testing beginning next month.  Keep in mind that this allows for crypto transfers – not necessarily a non-custodial wallet that would allow users to hold crypto directly.  This Decrypt article gives a little more deeper dive; and shows Robinhood’s focus on Coinbase as competition.

 

• PayPal launched their "Super App" (I really don’t like that term by the way) which is a re-bundling of payments, savings, bnpl, cards, digital wallet, crypto, shopping (via the Honey acquisition), and more into their newly designed mobile app.

 

• Revolut obtains U.S. broker-dealer license and intends to offer commission-free (via PFOF) and fractional ownership stock trading within their app in the coming months.

 

• Prepaid2Cash launched a new feature allowing you to convert prepaid cards to bitcoin.

 

• Synctera announced the launch of Synctera Card and Synctera Fraud to its BaaS marketplace platform. 

 

• It’s a new world of counterparty risk…  Critical infrastructure certainly appears to be the primary target for recent ransomware attacks; and this definitely should be on your mind as we enter a new disturbing era of risk (Ag Bankers pay attention):
  • Crystal Valley Cooperative ransomware attack
  • New Cooperative ransomware attack

 

• Significant FinTech IPO activity this week:
  • Remitly commenced trading this week (Nasdaq: RELY) and raised $300M at an $8B valuation.
  • MoneyLion also commenced trading this week (NYSE: ML) following the completion of the SPAC merger with Fusion Acquisition Corp.
  • Toast (NYSE: TOST) raised about $870M in its IPO this week as shares rose over 50% to a $28B valuation.

 

• FinTech funding updates for the week:
  • PandaDoc (electronic document firm) raised an undisclosed Series C at a $1B Unicorn valuation. 
  • Airwallex (Australian fintech that recently launched cross-border payments in the US) raised $200M in Series E funding round at a $4B valuation with YoY revenue growth of 150% at 1H2021.
  • Stairwell (cybersecurity firm) raised $20M in Series A.
  • Ocrolus (automation platform that analyzes financial documents) raised $80M in Series C at a valuation in excess of $500M. 
  • Sunday (payments app for restaurant meals) raised $100M in Series A funding round.
  • Bilt Rewards (CC and rewards platform for rental payments) raised $60M in Seed funding (that’s huge for a seed round).

 
 
Random Uncle Sean Stuff:

• Fall is officially here as of 9/22 this week – and not a moment too soon as we were still flirting with 100 degree temps here in the Texas Hill Country as recent as Monday, 9/20.  Whew!!!
• Some weird but interesting numerical facts for you (I clearly need to get out of the house more often - LOL):
  • Most of us have a difficult time rationalizing the size of one billion….  For instance, one million seconds equals about 11.5 days whereas one billion seconds is almost 32 years.
  • Did you know that no number from 1 to 999 includes the letter “a” in its word form?  It’s not until you get to one thousand that the letter “a” presents itself.
• And a couple of quick Dad jokes:
  • Are Russian weddings referred to as Soviet Unions???
  • An astronaut’s favorite part of a computer is the ‘space bar’…
  • If a cop pulls over a U-Haul truck, did he just ‘bust a move’?  (https://www.youtube.com/watch?v=xy4FXhkm6Nw – you’re welcome LOL)  😊

 
 
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.
​

Happy Friday!!!
 
Don’t forget to sign up here to have the Uncle Sean Update sent direct to your inbox each week.  While you are there, check out this fantastic interview with Steve Reich, Principal at Granite Creek Ventures.  Without further ado, here is the Uncle Sean Update for 9/17/21:

• I found this to be very interesting…  Square announced that Square Sellers will be able to accept payments through Cash App Pay.  I admit that I had to read through that a few times myself.  Another way to state this is consumers can use their Cash App account at participating Square Sellers for both online and in-person transactions.
  • Taking this a step further, this means that Square just completed a de facto closed-loop payment network outside of traditional payment rails (Visa, Mastercard, Discover, Amex) with money displaced from the traditional banking system (Cash App wallet)….  WOW, that made my head hurt!!!

 

• RiskScout announced they have partnered with Ncontracts to complement their BSA/AML “compliance products for financial institutions (FIs) seeking to bank emerging commercial markets while maintaining the required compliance.”

 

• MoneyLion adds crypto investing to their app just ahead of their 9/22 debut as a publicly traded company.

 

• Data Center Inc. (DCI) and Unifimoney partner together to offer DCI bank customers Unifimoney's wealth management platform through their online and mobile.  The platform includes “commission free trading of thousands of stocks and ETF’s, over 30 cryptocurrencies and precious metals including gold, silver and platinum.”  This is pretty cool if you are a community bank looking for a way to offer retail trading including cryptocurrencies to your customers.

                                                                                                                                                               

• Silicon Valley Bank partners with Plaid to offer clients ACH payment capability with Plaid’s instant authentication platform.  Basically, fintech companies can now easily authenticate with Plaid and pay with SVB in a simple one-stop solution.  The new solution links Plaid's instant account verification and SVB's ACH API capabilities; and also allows for “NACHA compliance fraud detection standards for WEB debits and data security, per the SVB press release. 

 

• SEC Chairman Gensler reiterates his stance on regulating the crypto asset market in testimony to Congress this week.  “Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending. Frankly, at this time, it’s more like the Wild West or the old world of “buyer beware” that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications. We can do better.”  Here are a few more viewpoints that I found to be interesting:
  • The Block gives a little bit deeper dive in an interview with Gensler on custodial crypto lending and staking products 'take on all the indicia' of securities related to the congressional testimony.
  • Abra (crypto exchange platform) CEO, Bill Barhydt gives a really good interview on CNBC 'Power Lunch' (5 min video) promoting crypto and discusses SEC Chair Gary Gensler’s comments criticizing the crypto industry.  One key point is that Mr. Barhydt refers to Abra’s “high yield interest earning accounts” as being issued through a Trust Bank – but Kelly Evans (CNBC co-anchor of “Power Lunch”) mistakenly refers to this as “savings accounts” at 2:55.  To me, that’s where the increased regulation needs to start.  Too many ordinary consumers think these are FDIC insured savings accounts and they simply are not; and unfortunately, not all companies in the space are as transparent and forthcoming as Abra and Mr. Barhydt.

 

• Capital One is the latest big bank beta-testing a BNPL offering of their own.

 

• We saw some more interesting M&A activity this week:
  • Intuit announced an agreement to acquire Mailchimp for approximately $12B in cash and stock; and continues to build out their SMB focused platform (Credit Karma, Intuit Turbo Card, Money by QuickBooks, QuickBooks Cash, Mint, etc.).
  • Goldman Sachs agreed to buy Greensky (consumer finance loan platform) for $2.24B in stock to enhance their consumer offerings with Marcus.
    • Yes – I saw a ton of articles referring to the Greensky acquisition as a BNPL play.  Well that sure is a stretch….  I guess you could argue that ANY financing is a BNPL play by definition if it helps drive your SEO – sheesh!!!  Greensky is a merchant supported consumer loan origination and servicing platform for home improvement and healthcare (patient financing), not an online shopping cart BNPL checkout feature…..  C’mon man!!!
  • TransUnion acquires Neustar for $3.1B to increase their presence in the identity fraud marketplace.

 

• Congratulations to Excite Credit Union for achieving their long-awaited CDFI certification with assistance from CU Strategic Planning.

 

• Shout out to Digital Onboarding for receiving their SOC 2 Type 2 Certification – great job!!!!

 

• It was a very busy week for FinTech funding updates (follow the money):
  • Rumored for a few weeks now, Melio (business payments platform) announced that they raised $250M in Series D at a whopping $4B valuation – more than 3X increase in valuation from January.
  • BitSight (cybersecurity risk platform) raised $250M from Moody's.
  • Papaya Global (international payroll platform) raised $250M in Series D funding at a $3.7B valuation which is 10X increase over Sept 2020.
  • MaxReward raised $3M in Seed funding.
  • SpotOn (payments and software) raised $300M in Series E funding round and acquires Appetize (mobile commerce payments) for $415M.  This new round gives SpotOn a valuation of $3.15B – a 5X increase in valuation from their Series C this time last year; and almost 75% increase from their Series D in May (4 months ago). 
  • Ribbon (digital RE platform enabling cash offers) raised  $150M in capital consisting of $75M in Series C plus $75M in additional working capital.  Valuation was not disclosed, but the company referenced 15X growth rate this year.
  • Peach Finance (loan management, servicing, and compliance SaaS platform) raised $20M in Series A financing round.
  • VC firm, QED Investors raised $1.05B investment fund that includes $550M in QED’s Fund VII for early-stage fintech investing and an initial $500M for their new growth stage fund.
  • SellersFunding (SMB marketplace lender and payments platform) raised $166.5M capital in a combination of Series A and a credit facility (mix was not disclosed).
  • Persona (identity verification infrastructure) raised $150M in Series C funding with a valuation of $1.5B.  The SOC 2 Type 2 certified platform touts customers such as Square, Brex, BlockFI, Branch, Empower and many more.
  • Abra (crypto wealth management platform) raised $55M n Series C funding round.
  • And check out the funding emphasis on credit building platforms this week:
    • Sequin (credit builder) raised $5M in Seed funding to further market their credit builder platform designed for women.
    • Grow Credit (credit builder) raised $6.3M in equity financing plus another $100M debt facility for a total of $106.3M capital raise.
    • SelfFinancial (credit builder) raised $50M in Series E funding round.
    • TomoCredit (credit builder CC) raised $10M in Series A round.  TomoCredit (short for Tomorrow’s Credit) issues a Mastercard credit card issued by Community Federal Savings Bank (technically a charge card as balances cannot be carried over) with 7-day automatic pay schedule with zero fees and 0% APR.  With no credit pull and no fees, TomoCredit makes their money off of interchange.  The sustained on-time payments and low credit utilization builds your credit score over time with TomoCredit reporting to all 3 major credit bureaus.  Boasting 10X growth for 2021, TomoCredit has approved more than 300,000 customers and expects to issue a total of 500,000 cards by year end.

 
 
Random Uncle Sean Stuff:

• It was a crazy week of Birthdays here at FedFis - Patrick Rivenbark, Krissa Coffin, and Tanner Mayo all celebrated birthdays this week!!!  Pretty sure all are over 21 now….  😊  HAPPY BIRTHDAY!!!!!
• I have a 7’ cedar picnic table that I am going to try to sand and refinish this weekend.  I have all the supplies - new orbital sander, coarse and fine sanding disks, 2 gallons of spar urethane, mask, gloves, top of the line brushes, drop cloth, etc.  Which means I will probably end up tossing it all into the burn pile out of frustration and buying a new table Sunday evening…  That’s how a lot of Uncle Sean’s projects turn out – LOL!!!!  I sure hope Aunt Patty loves her new table!!!  
• Many people have asked me how I capture these Dad jokes every week.  The answer is simple, I keep a “dad-a-base” (LOL)….  And here are a few more to get your weekend started right:
  • The boss came by today and said “have a great day” – so I went home…
  • What is Forrest Gump’s password?  “1forrest1”…
  • What generation does Forrest Gump belong to?  “Gen A”…
    • ADMIT IT – you said that out loud didn’t you!!!!  HAHAHA – I did too!!!
  • And lastly, an entire generation will only know Billy Ray Cyrus for “Old Town Road.”  And that breaks my heart…. My achy breaky heart… 😀

 
 
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.

Happy Friday!
 
Short weeks are always crazy busy!  Here is the Uncle Sean Update for 9/10/21:
 
Remembering 9/11 twenty years later…  I was a Senior Accountant at Chickasaw Telephone Company and was in the middle of intercompany reconciliations when the news broke that morning.  Many of us went into one of our conference rooms and watched on the TV as the terrible events unfolded.  Our world changed forever that day.  Many years later while working at Samsung, I would find myself in the middle of the World Trade Center complex of buildings each summer (for about 5 years) going through trade credit insurance renewal negotiations and presentations.  I vividly recall the construction of the 9/11 Memorial, the surreal feeling of standing next to it, and the incredibly vast mix of emotions when finally getting a chance to enter the new One World Trade Center building (fka The Freedom Tower)…

• 9/11 Memorial & Museum
• "I can hear you!  The rest of the world hears you!"

 
 

• Late last Friday, the FinTech Cowboys (powered by FedFis data) posted a fantastic interview with Sunil Sachdev (SVP and GM of Community Bank Segment at Fiserv) – check it out!!!  Sunil does a great job and states “there is a path to monetizing that charter outside of M&A” – good stuff!!!

 

• Varo Bank raised $510M in Series E round at a $2.5B valuation.  This funding came just in the nick of time as Varo’s continued losses were about to put their capital in a rather perilous position (see 8/6/21 Uncle Sean Update).  But the bigger picture is the whopping $2.5 BILLION valuation – DANG!  Herein lies the difference from traditional brick and mortar / branch model valuation versus a digital bank (here at FedFis we call them Direct Banks).  Armed with this new war chest, it will be interesting to see how Varo scales up over the next year or two.   Varo CEO, Collin Walsh, talks about the funding and Varo’s market presence on this CNBC 'Tech Check' video (under 4 minutes).

 

• Uncle Sean geeks out a little here so feel free to scroll on down if you like – LOL…  The FDIC released the Quarterly Banking Profile report this week (I love the fact that they also break out a Community Bank section).  This report when coupled with the Federal Reserve Beige Book (summary of economic conditions by Federal Reserve District) gives a really good macroeconomic view of how things are going here in the US.  Key summary points include:
  • Bank Net income for 2Q was up by $51.9 billion from 1Q, but don’t get too excited as it was due to a $73 billion decline in provision expense.  Overall reserves remain high at $195B or 1.80% of total loans and leases (compared to $124B and 1.18% of loans and leases in 4Q2019) as Covid remains a concern.
    • Asset Quality improved – nonperforming (90 days delinquent plus nonaccrual) declined $13.2B (10.8%) from 1Q; total past due loans declined 12 bps to 1.01%; and total net charge-off rate dropped 30 bps to 0.27% - the lowest level on record.
  • 2Q Net Interest Margin of 2.5% is another record low (banks are simply not designed to operate long-term in a zero rate environment).
  • I was surprised by this on the CC side - Loan volume is up over 1Q by $33.2B driven by credit card balances (+$30.9B) and auto loans (+$18.9B).
  • The key point in The Beige Book was covered in the first sentence of the National Summary – “Economic growth downshifted slightly to a moderate pace in early July through August.”  The decline was due in large part to pandemic sensitive industries (dining, travel, tourism) “reflecting safety concerns due to the rise of the Delta variant.”

 

• The Federal Reserve published a research paper this week intended to “serve as a resource for community banks as they embark on responsible innovation”; and an overview of “community bank partnerships with fintechs” titled Community Bank Access to Innovation through Partnerships. 

 

• Netspend launches Earned Wage Access platform (EWA).  Uncle Sean felt that it was simply a matter of time considering their massive presence behind Prepaid General Purpose Reloadable (GPR) debit cards; and the fact that almost all payroll / pay-cards are prepaid GPR – this move to add EWA makes perfect sense.

 

• MVB (through their BaaS subsidiary, Victor) and NYDIG partnered together to create a white label Bitcoin & banking platform for fintech companies to offer to their customers.

 

• If you need an easy to read and basic summary of what cryptocurrency is and where it comes from, I found this Yahoo Finance article to be very good with a ton of extra links if you want to go deeper.  My favorite line was related to blockchain as a ledger of coded transactions – “think of it as a checkbook for cryptocurrency.”

 

• Oh Coinbase – it’s been a rough few weeks….  This week, Coinbase gets a “Wells Notice” from the SEC regarding their upcoming lending platform.  Mr. Paul Grewal, Chief Legal Office for Coinbase, published a well-written (at least in my opinion) blog detailing their frustrations – check it out here.  Some additional points:
  • Coinbase’s proposed Lend product allows up to 4% APY by lending out your USDC to verified borrowers.  This is not FDIC or SIPC insured, but Coinbase ‘guarantees’ the principal.
  • The SEC has clearly taken the position that Coinbase Lend is a security, or an investment; while Coinbase argues “…it’s not an investment contract or a note. Customers won’t be ‘investing’ in the program, but rather lending the USDC they hold on Coinbase’s platform…”  BankingDive has a good summary.
  • Coinbase CEO, Brian Armstrong, took a more aggressive (yep – that’s the nicest way I could put that) approach by going on a Twitter rant calling the SEC behavior “sketchy.”
    • I get it that he’s pissed, but it’s probably not a good idea as a publicly traded entity to call out the SEC on social media….  I’m betting his Board probably had a few things to say afterwards and behind closed doors.

 

• The Consumer Financial Protection Bureau (CFPB) sues LendUp Loans AGAIN for continuing to deceive “tens of thousands of borrowers” and violating the standing 2016 consent order.  As part of the complaint filed on 9/8 in the United States District Court for the Northern District of California (which you can read in detail here), the CFPB is seeking an injunction, damages or restitution to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.
  • I don’t think the saying, “there’s no such thing as bad publicity” applies here….  OUCH!!!

 

• There were some interesting acquisitions this week:
  • Mastercard announced an agreement to acquire CipherTrace (blockchain analytics and crypto security start-up).
  • PayPal agreed to acquire Paidy (BNPL platform in Japan) for US$2.7B.
  • JPMorgan announced a 75% controlling interest in Volkswagen Financial Services (Volkswagen’s payments platform) to expand its digital payment capabilities and extend the platform to "the broader auto industry” as in-vehicle technology takes off.  If you have seen Apple’s CarPlay, you can imagine the possibilities of integrating payments.

 

• Notable FinTech funding updates this week:
  • HoneyBee (employer sponsored financial literacy platform for employees) raised $105.7M in total funding that includes $5.7M equity round and $100M debt facility.
  • Zebedee (developer of bitcoin payment rail in gaming platforms) announced $11.5M in Series A funding round.
  • TrueFort (cybersecurity zero trust platform) raised $30M in Series B funding.  Valuation was not disclosed but the company did state they “experienced year-over-year bookings growth of 650% and a 260% growth in ARR.”
  • Orchard (residential real estate platform including available all-cash offerings) raised $100M in Series D with a valuation just north of $1B.
  • Lean (gig worker financial platform) raised $4.5M in Seed funding. 
  • Wisetack (business embedded finance solution) raised $45M in Series B to bring embedded BNPL financing to home services and other verticals including auto repair, elective medical, dental, veterinary, legal, and more.
  • Rocket Dollar (self-directed retirement platform) raised $8M in Series A funding.

 
 
Random Uncle Sean Stuff:

• We had a bunch of plans for Labor Day – weed & mulch the flower beds, do some yard work, wash the cars, run some errands, etc…..  But Aunt Patty and I stayed inside (still 100 degrees here), sat on the couch and watched movies all day while eating leftovers and napping on and off.  I must confess, “doing nothing was everything I had hoped it would be” and I highly recommend it if you get a chance - LOL!!!  😊
• And of course – here are a couple of obligatory Dad jokes for your weekend:
  • Reading can seriously damage your ignorance.
  • A wise man once said nothing…
  • And my personal favorite for the week - I recently bought a toilet brush…  Long story short, I’m going back to toilet paper…!!!!  HAHAHAHAHA!!!!!!

 
 
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.

Happy Friday & Happy Labor Day Weekend!!!!
 
Don’t forget to click here to subscribe to the Uncle Sean Update and get it delivered to your inbox each week – all the cool kids are doin’ it!!!  Here is the Uncle Sean Update for 9/3/21:
 

• Amazon taps Affirm to offer BNPL feature to the AMZ shopping cart at checkout for orders greater than $50.  Currently testing with select Amazon customers, but is expected to be widely available soon (just in time for Christmas – CHA-CHING!!!!).  PYMNTS.com has a good write-up reminding us that Affirm now touts Amazon AND Walmart as BNPL customers.  That’s stout!!!

 

• Some Food for Thought…..  Even though not specifically FinTech (yet), I found Apple’s announcement this week to add driver's license and state IDs to Apple Wallet for iPhone and Apple Watch to use at security at participating airports to be very, very interesting….  
  • Could this move into the banking and fintech space as eKYC and/or online identity verification???  Could this be a tech enabler to the White House EO for consumer banking data portability???  This gets even more compelling when you consider industry claims that Apple’s payments accounted for 92% of all mobile wallet debit transactions in the U.S. during 2020.  I guess we will just wait and see.

 

• Celtic Bank announced a New "Recurring Revenue" Loan Offering.  This is an expansion of their debt financing offerings targeting growth stage tech companies that are “not well suited for traditional loan products given the nature of their business models.” 
  • If this sounds risky to you (lending based on recurring revenue as opposed to collateral / equity), then you are not alone.  Additionally, for us “white-haired” folks, it smells a lot like receivables factoring (which still carries a slight negative connotation for credit superfreaks such as myself).  However, keep in mind that this loan program is NOT designed for anyone & everyone.  Celtic mitigates this risk by targeting “mission critical” tech customers with solid contractual / subscription revenue models that are looking at a “two to four-year horizon on a liquidity event.  Ideally, this is one of the last tranches of capital to be raised to get them to a liquidity event.”
  • Now that sounds better…  Uncle Sean would not be surprised if Celtic rolls this out as a Sponsor Lender platform for other non-bank / fintech lenders looking to expand / offer revenue financing programs (especially considering that Celtic is already well versed as a Sponsor Bank in the BNPL, Credit Card, and Business Lending space).

 

• I know we have covered this a couple of times over the last few months, but it is live now – Walgreens announced the official launch of their bank account and debit card with rewards platform dubbed Scarlet; and it’s pretty cool:
  • Mastercard debit card issued by MetaBank (sponsor bank) with Allpoint ATM network.
    • Debit rewards (must be a myWalgreens member) include 5% Walgreens Branded products; 3% all other Walgreens store purchases; 1% everywhere else Mastercard is accepted.
  • Mobile App features include: account text alerts, budget and goal setting, and subaccount structure (with up to 4 subaccounts – each with their own debit card that the primary user can control – think “teen banking”).  Bill Pay and Add Cash via “barcode reload” is also included in the app.
  • Mobile Check Deposit by Ingo Money (sponsor bank here is First Century Bank)
  • Yes, you can even get your paycheck up to 2 days early with Direct Deposit – but this is subject to your employer submitting to the bank 2 days before payday.
    • Recall the 8/6/21 Uncle Sean Update where I stated “RTP will kill ACH risk” - If you can’t tell, I am getting tired of hearing about early direct deposit access…  The point here is that if it is RTP, your employer will not be submitting the ACH file two days early anymore.

 

• Late last Friday, SEC Chairman Gary Gensler doubled (err – quadrupled) down on his inquiry into “gamification and behavioral prompts used by online brokerages and investment advisors” per this CNBC article.  Yep – here’s looking at you, Robinhood….  Here is the official SEC press release stating the same.
  • And if that wasn’t enough, earlier this week in an interview with Bloomberg, Gensler continued his long-standing criticism of payment for order flow (PFOF) due to “inherent conflicts of interest” and stated that a full ban of PFOF is "on the table" (for reference, Robinhood derives about 80% of their revenue from payment for order flow).  As expected, Robinhood fired back and said they would challenge a ban on PFOF in court.  Robinhood’s legal chief Dan Gallagher, himself a former SEC commissioner, went on to state, ““The idea of banning payment for order flow is pretty draconian…”
    • I think that is the grown-up, modern day version of, “oh yeah, meet me after school at the flag pole!”  FIGHT, FIGHT, FIGHT!!!
    • But don’t worry, HOOD just announced that they are planning to roll out an early access to direct deposit feature through their Cash Management product (ugh)…..  Yeah, that should fix everything – LOL!!!

 

• Square launches Invoices Plus, a new paid subscription service offering advanced features over their existing free invoice software. 

 

• Ahh Coinbase….  Late last Friday, Coinbase erroneously sent account security notifications to 125,000 customers informing them (via text nonetheless) that “your 2-step verification settings have been changed” resulting in most of those customers freaking out believing their account had been hacked.  This is fresh off of the CNBC Report earlier last week detailing 2FA hacks and “terrible customer service” at Coinbase.

 

• PayPal is allegedly looking into a stock-trading platform and recently hired Co-founder of online brokerage TradeKing, Rich Hagen, who is now the CEO of “Invest at PayPal” – a previously unreported division of PayPal.

 

• Remitly filed their S-1 showing $202M in Revenue and $9.2M Net Loss for 1H2021 and 5m customers.

 

• Revolut is planning US credit card launch later this year.

 

• Status Money to launch a cash back credit card that automatically invests rewards in cryptocurrency powered by Railsbank credit-card-as-a-service platform.

 

• Plaid and Astra announced a new partnership to enable fintech's to embed automated bank transfers (money movement).  Basically, Astra will use Plaid’s instant authentication for bank accounts to more easily facilitate Astra’s instant direct deposit switching.
  • This IBSintelligence article does a good job of explaining this new partnership – “For developers with a Plaid integration, adding Astra’s transfer automation is extremely easy. Using an instance of Plaid Link within an application, customers are able to connect their bank account and set up automated bank transfers to or from that connected account in minutes.”

 

• Notable FinTech funding updates for the week include:
  • Alpaca (equities trading software API) raised $50M in Series B funding.
  • Origin (employee financial wellness platform) raised $ $56M in Series B funding round.  Valuation was not disclosed but the company did reference 6X increase in user growth over the past 12 months.
  • Viva Finance (alt credit lender serviced through payroll) raised $6.2M in Series A funding round.
  • Hum Capital (business capital lender) raised $9M in Series A round.
  • PayEm (global spend and procurement platform) raised $27M in capital including $7M in Seed plus $20M in Series A.
  • Corelight (cybersecurity – Network Detection and Response platform) raised $75M in Series D.
  • Point (neo/challenger - debit rewards app) raised  $46.5M in Series B funding round.
  • HomeLight (proptech platform) raised $363M in total financing including $100M in Series D plus another $263M in debt financing at a valuation of $1.6B.  HomeLight strives to “make purchasing a home easier by fronting prospective buyers the funds to make all-cash offers”; and claims to have built a “faster application and underwriting process” that allows the company to guarantee that it can close a loan in 21 days with “zero lender fees and transparent rates.”

 
 
Random Uncle Sean Stuff:

• Ahh….  Labor Day Weekend, College football, dove hunting in South Central Texas….  But it’s STILL 100 DEGREES!!!!!  I’m so ready to complain about how cold it is outside – LOL!!!!
• So this absolutely cracked me up – the 70’s Swedish rock band, ABBA (yes, that ABBA – the youngest member of which is 71 now) has announced a comeback concert and a new album called “Voyage” – LOL!  The London concert is set with the band members to appear as virtual holograms of their younger selves (appropriately dubbed as “ABBA-tars”) which took about 5 weeks of performing with 160 video cameras to create.  I’m not laughing at the comeback concert itself, but rather the interview comments in this AP article which are SOLID GOLD (I absolutely love their humor):
  • “We took a break in the spring of 1982 and now we’ve decided it’s time to end it.”
  • “They say it’s foolhardy to wait more than 40 years between albums, so we’ve recorded a follow-up to ‘The Visitors.’”
  • “And also, we want to do it before we were dead.”
    • Uncle Sean is literally crying laughing at these comments!!!!  Here are a few of ABBA’s classic music videos for you to reminisce (turn the volume up; and it’s perfectly okay to dance and sing along – I did) - Dancing Queen, S.O.S., Waterloo, Take a Chance on Me
• And of course a few quick Labor Day inspired Dad Jokes for your long weekend:
  • I tried being a professional fisherman, but I couldn’t make it on my “net” income.
  • Dad always told me and Davey to “work hard until your bank account balance looks like a phone number”….  I am happy to report that I have $9.11…  I’ve made it, Dad!!!! 😊

 
 
Have a GREAT Labor 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.

Happy Friday!!!
 
Here is the Uncle Sean Update for 8/27/21:
 
Check out our Fintech Cowboys site (powered by FedFis data) where you can sign up to get the Uncle Sean Update emailed direct to your inbox.  While you are there, check out the Chris Williston (CEO of IBAT) interview - “… banks are saying maybe there is something to this fintech sponsorship or direct bank offering” – you betcha!!!!
 

• Stash gets the top spot on the Uncle Sean Update this week with the announcement of a multi-year partnership as the personal investing sponsor of the San Francisco 49ers.  So what does this mean???  Well, I’m glad you asked!  The 49ers and Stash will be bringing the Stash app as well as Stash101 financial literacy programs to Bay area adults and students through various initiatives including “free financial seminars, educational competitions for fans with participation from 49ers players, and virtual classes that teach the fundamentals of investing” that will be announced throughout the season.  But wait – it gets even better!!!!!  “The money skills training will be incorporated into the curriculum of the STEAM education field trips for Bay Area K-8 students hosted by the 49ers at Levi's® Stadium.” – GREAT job!!!!
  • More info - the Stash101 program is designed for parents and educators to provide a free simulated banking and investing platform that teaches financial literacy to children (you already know Uncle Sean is a huge proponent of financial literacy in our K-12 schools, so I am definitely excited to see this).
  • Always remember - “Wealth does not create financial literacy, rather it is financial literacy that creates wealth and ultimately financial independence.” – Uncle Sean 😊

 

• Coinbase finds themselves at the center of a controversy this week due to a CNBC Report detailing hacked customer account takeovers followed by “terrible customer service” from the company.
  • In fairness to Coinbase the article references PC hacks and SIM Swapping on mobile devices, not a Coinbase hack job.  However, it is still very unfortunate since these are crypto exchange / blockchain transactions and as such, they are not reversible.
  • The article mentions 11,000 complaints with the FTC and CFPB since 2016 mainly due to poor customer service; and 1,128 BBB complaints in the last three years.  Ouch!!!!

 

• Y’all know that Uncle Sean always geeks out a little too much regarding monetary policy and macroeconomic conditions – and this week is no different.  So, what happened at Jackson Hole this week?  Well the big news was that the Federal Reserve’s annual retreat at Jackson Hole, WY was moved to virtual only due to Covid Delta Variant concerns.  I legitimately feel bad for them because Jackson Hole is amazing!!!  Okay – here is a quick rundown:
  • It’s important to note that the Jackson Hole meeting is an economic symposium sponsored by the Federal Reserve Bank of Kansas City.  Not to be confused with an FOMC policy event.  So while Chairman Powell’s speech is highly anticipated, we need to reel in our expectations a little and know that only the FOMC can set monetary policy.  So, with the understanding that this is more of a strategy discussion, we can summarize Chairman Powell's speech (spoiler alert – pretty much the same as the July FOMC minutes):
    • Spiked inflation is primarily due to constrained supply and is deemed mostly transitory.
    • Labor markets have improved considerably; clear progress has been made for maximum employment; and wage increases do not appear to be placing undue stress on the pricing of goods and services (wage - price spiral).  However, 5.4% unemployment is still too high.
    • Delta Variant is still a near-term risk.
    • And the indicator we have all been waiting for….  If we continue on the present course of economic improvement, it may be appropriate to reduce asset purchases this year.

 

• Visa made headlines this week by purchasing a CryptoPunk NFT for $150,000 (actually it was 49.50 ETH facilitated by Anchorage Digital).  If you are shaking your head in disbelief or even in confusion as to WHY – consider this….  Visa just made headlines on CNBC, Forbes, Bloomberg, NBC, Yahoo, The New York Post, TheStreet, MarketWatch, CNET, tons of Art related media outlets, and every crypto / blockchain site you can think of for a mere $150K…. 
  • Ironically, you could argue that legacy payment rails have the most to lose related to blockchain, but for me personally – I am excited to see them embrace the new alternate technology (via Ethereum blockchain).  Check out Visa’s own Q&A with their resident crypto and NFT expert, Cuy Sheffield, titled NFTs mark a new chapter for digital commerce.
  • Of course I just can’t let this go - I know I posted this on the 4/2/21 Uncle Sean Update when it first came out, but here it is again – the Saturday Night Live music-video skit “What the Hell's an NFT?”  Hilarious 3 minutes!!!!

 

• Sezzle (BNPL) has confidentially filed a draft registration statement for a U.S. IPO.  You bet that Uncle Sean will be pouring through this S-1 once it becomes publicly available.

 

• GoDaddy (web domain registrar - NYSE: GDDY) sure feels like symbolism as to everything that is going on in FinTech / Neo Banks / embedded finance….  Check out their latest where they announced invoicing and payment solutions that enables web designers and developers to issue invoices and get paid through a simple integrated user interface…..  Maybe only a matter of time before they offer a business debit card and SMB capital loans….  Why wouldn’t you considering the multi-billion dollar valuations of Brex and Ramp….??? 

 

• Brex (neo business bank) announced the launch of Brex Venture Debt to allow select business customers access to debt financing.

 

• Klarna (BNPL) reached 20 million U.S. users and a 311% increase YoY in gross merchandise volume, but their 1H2021 financials show significant increase in credit losses (footnote 7 on page 35).  Klarna addresses this in the Business Overview by stating, “the share of first time Klarna consumers affects net credit losses, which is why new market entries are likely to entail higher credit loss rates during the initial phase as our credit models mature.”  Hmmm…..

 

• The Federal Reserve, FDIC, and OCC jointly issued a guide to help community banks evaluate fintech relationships titled Conducting Due Diligence on Financial Technology Companies - A Guide for Community Banks.  It’s a start…  However, I must admit that I laughed WAY too hard at the fact that the original FDIC link was broken and showed a 404 Page Not Found error!!!!  All I could think of was, “we’re from the government and we’re here to help.”  LMAO!!!!!!

 

• It’s been a tough year thus far for high-profile cyberattacks (SolarWinds and Kaseya breach, Colonial Pipeline hack, and supply disruption at meatpacker JBS) and the White House calls in the big dogs to encourage private sector support of cybersecurity as a “core national security challenge.”  Afterwards, the White House posted a host of ambitious commitments and initiatives as a result of the meeting.

 

• Airwallex (Australian based cross-border remittances for business) has launched in the U.S. utilizing Evolve Bank & Trust as their BaaS sponsor bank with a Visa business debit card coming soon.

 

• More FinTech funding updates this week:
  • Zepz (fka WorldRemit, a digital cross-border payments company) raised  $292M in Series E at a $5B valuation.
  • Ramp raised $300M in Series C at a $3.9B valuation citing a 5X increase in the number of cardholders on the platform since Jan 1; a total of 2,000 U.S. businesses using Ramp; and a 3X increase in transaction volume since the last funding raise in April.  This is up from their $1.6B valuation in April – yep, just 4 months ago (a valuation increase of $600M per month).
  • Hunters (cybersecurity) raised $30M in Series B $30M in Series B funding.
  • Balance (B2B ecommerce payments platform) raised $25M in Series A round.
  • Zeal (fka Puzzl, an embedded payroll API) raised $13M in Series A.

 
 
Random Uncle Sean Stuff:

• College football is here!!!!  Uncle Sean will be tuning in to watch Shawn Sinner’s Nebraska Cornhuskers take on Illinois on Fox at Noon CDT!
• Okay – couple of quick jokes to get you through the day:
  • The farmer allows people to cross the pasture for free….  But the bull charges….  LOL!
  • If Teflon doesn’t stick to anything, how do they get it to stay in the pan???
  • Why is abbreviation such a long word???
  • I’ve always wanted to learn how to juggle, but I’ve never had the balls…  uh, I mean bowling pins to do it….
  • Aunt Patty told me to put ketchup on the grocery list – now I can’t read any of it…!!!

 
 
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.
​

Happy Friday!!!
 
Here is the Uncle Sean Update for 8/20/21:
 
Check it out – due to an overwhelming amount of demand (y’all know how to make Uncle Sean blush) you can now subscribe to receive the Uncle Sean Update (free of course) via email at our sister-site https://fintechcowboys.com/uncle-seans-weekly-update/ - WOOHOOO!!!!!  Of course we will still post on LinkedIn as well as at FedFis Bulletin each week.  Look for even more great industry interviews and podcasts to come at fintechcowboys.com powered by FedFis.  This is gonna be GREAT!!!!!
 

• A quick “off the reservation” op-ed from Uncle Sean to kick us off this week……  Recall a few weeks back where the White House issued an Executive Order to look at banking data portability for consumers…  Well, I am reading a few things this week that may or may not be related, but I found them to be conspicuously ironic when paired together (maybe it’s nothing, but maybe it’s something – you can decide)…
  • Canada appears to be slightly ahead of the U.S. in exploring the concept of “open banking” (really it’s enhanced API’s) – check out Canada's Report on Open Banking from April 2021, whereas the US (CFPB) is still “considering” availability of electronic consumer financial account data since October of 2020….
  • If you read the Canada report, one item JUMPS out at you – the term “screen scraping” is mentioned 15 times which just SCREAMS PLAID…!!!!!  If you geek out even more, the original CFPB ANPR Report - Consumer Access to Financial Records includes the term “aggregator” 37 times….  Yep – sure smells like a big pile of Plaid to me too.  LOL!!!!
  • Maybe or maybe not, inconsequently – Plaid just announced an additional funding extension (amount was not disclosed) to their previously announced $425M Series D round that includes investments from JPMorgan and Amex…..  Remember the Jamie Dimon infamous "scared shitless" earnings call in January where he specifically commented, “people who improperly use data that’s been given to them, like Plaid.”  My how the times they are a changing – LOL!!!!!

 

• Widely seen as a shot to Square, PayPal announced that they are dropping late fees for BNPL purchases globally.  The fees will be waived in the U.S., U.K., and France beginning October 1 (Germany and Australia are already free of late fees).
  • Here is the rest of the story - Square just spent $29B to acquire Afterpay (for reference – Square’s total market capitalization is about $118B).  Afterpay financials (see page 16) show that about 8.5% of their revenue comes from customer late fees.  Now I know not all revenue streams are created equal, but that probably cost ole Jack Dorsey a cool Billion dollars or so in valuation if they have to drop late fees too….  OUCH!!!!  Yep - as expected, the commoditizing of BNPL offerings has now begun.

 

• i2C announced that they are expanding their partnership with Visa so that i2C issuers can offer Visa's BNPL solution at the point of sale.  The Visa Installments API model enables issuers to offer BNPL installment plans for their cardholders under their existing credit account lines for “pre-purchase, during purchase, and post-purchase programs”. 

 

• Fiserv continues to expand and dominate in the payments world; and their latest announcement to enable businesses to pay direct to consumer Venmo and PayPal accounts via the Fiserv Carat ecosystem, is just more icing on the cake for Fiserv.

 

• Late last week, Chime announced that they raised $750M in Series G round at a lofty $25B valuation (nearly $10B higher than their latest valuation in Oct 2020 – ???) and positions Chime for an IPO in the first half of 2022. 
  • Yessir, I have read the numerous reports out there and I hate to call BS….  Well never mind – I am calling BS on some of these estimates quoting Chime customer count at 20+ million (cough, cough – yeah right), pretty much EBITDA breakeven (hell – at roughly 10% of the US “banked” population, just exactly how much more market share do you need to become profitable???), and an estimated $200M in top line revenue….  I find that valuation as well as the customer count a little hard to fathom considering Citi has about 19M deposit accounts per schedule RC-O (# of deposit accounts excluding retirement accounts with a balance less than $250K).…..  Who knew there was so much money in “free banking”???  Ahhh, but all the young cats will just tell me I’m old and I don’t understand….  I guess we will just wait for the S-1 to drop before we know the whole picture.

 

• Walgreens launched their anticipated credit card program this week (issued by Synchrony Bank) as part of their larger embedded finance platform that includes a “coming soon” Mastercard debit card issued by MetaBank and built by InComm Payments’ digital banking-as-a-service platform.
  • The myWalgreens Credit Card is a closed-loop credit card with 5% to 10% rewards that can only be used at Walgreens locations, Walgreens.com and the Walgreens mobile app (also includes a digital wallet with rewards platform), and Duane Reade stores (a Walgreens subsidiary in NYC).
  • The myWalgreens Mastercard Credit Card is an open-loop credit card that can be used anywhere Mastercard is accepted.
  • I know we covered this in the 4/2/21 Uncle Sean Update, but it’s worth repeating now that they will have a credit, debit, and mobile offering…..  If done correctly, their embedded finance / mobile banking app could become a very serious challenger bank when you consider the following stats:
    • Walgreens has about 9,200 locations (that’s about the same size as the US branch count for JPM and BOA combined….  DANG!!).
    • As of August 2020, approximately 78 percent of the U.S. population lives within five miles of a Walgreens, Duane Reade store.
    • Walgreens interacts with approximately 8 million customers in its stores and online each day.
    • According to PRB research, “the number of Americans ages 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, and the 65-and-older age group’s share of the total population will rise from 16 percent to 23 percent.”  Maybe this Walgreens bank works well with an aging population affixed to prescriptions…

 

• This is cool – Nerve (right here in Austin, TX) appears to be the World's First Neobank Created for Musicians and is launching next month.  Equally as impressive is the fact that Piermont Bank is the sponsor bank (they have only been around since 2019).  Congratulations and nice work to all parties involved!

 

• And the Credit Union trend of acquiring Banks continues at a blistering pace with two more deals announced this week.  For those keeping score, this is the 10th CU acquisition of a bank this year, 5 of which have been in August – source: FedFis M&A Database (see what I did there – LOL).
  • Fairwinds Credit Union (charter #68417; total assets $3.8B) announced an agreement to acquire Citizens Bank of Florida (cert #16442; total assets $492M).
  • Scott Credit Union (charter # 66370; total assets $1.5B) announced an agreement to  acquire Tempo Bank (cert #30615; total assets $93M) in an all-cash transaction for $14.125M.

 

• Brex announced an agreement to acquire Weav for $50M.

 

• Paysafe (NYSE: PSFE) expands even more in Latin America by acquiring SafteyPay in an all-cash transaction totaling USD $441M.

 

• Aspiration (the OG of ESG before ESG was even a thing) is set to become a publicly traded company after merger with SPAC InterPrivate III Financial Partners, Inc.  Valuation is a huge $2.3B for a company with a $100M top-line revenue run rate (boasting 7X growth over the last year) and 5 million members per the very well done Investor Deck.

 

• Other notable FinTech funding (excluding Plaid and Chime mentioned above) updates for the week:
  • DriveWealth (brokerage-as-a-service with fractional trading) raised a hefty $450M in Series D at a $2.85B valuation.
  • Branch (EWA employer payments platform) raised $48M Series B plus $500M credit facility.  Valuation was not disclosed, but they did note 300% growth year over year.
  • Blumira (cybersecurity automated threat detection and response) raised $10.3M in Series A funding round.
  • One (FinTech Neo Bank) raised $40M in Series B  $40M in Series B funding round.
  • Sightline Payments (payments platform for online gaming and sports betting) announced $244M funding round at a $1B valuation touting 1.5 million accounts.
    • This is particularly interesting as I recently read where the NFL is possibly going to allow limited sportsbook betting ads this year during broadcasts.  Hmmm…. 
  • Certik (blockchain cybersecurity) raised $24M extension of their previous $37M Series B.
  • Candor (loan engineering system and mortgage decisioning platform) raised $12.5M in Series A funding.
  • Jaris (credit-as-a-service full stack embedded lending solution – wow that was a mouthful!) raised $31M in Series B financing.
  • MobileCoin (digital payments ecosystem) raised $66M in Series B funding.
  • PayEngine (white-label payments facilitation platform) raised $1.6M in Seed funding.

 
 
Random Uncle Sean Stuff:

• 7 days until college football – SEVEN DAYS!!!  I know it’s dubbed “week 0” and the rest of the season starts a week later – but it’s a start!!!!!!
• If you find yourself rambling around the Texas Hill Country, do yourself a favor and stop by the Wimberley Cafe in Wimberley, TX.  Aunt Patty and I went there Sunday morning and had blueberry pancakes and an omelet with hashbrowns – everything was amazing!  Don’t forget to try their salsa – it has a smokey chipotle and cilantro flavor that was fantastic (and is great on that omelet)!
• And a couple of obligatory Dad Jokes to get you through your day:
  • If chocolate milk comes from brown cows, do deviled eggs come from evil chickens???
  • Lesser known fact – Mozart did not like chickens at all because they kept saying Bach-Bach-Bach!
  • It’s inappropriate to make a Dad Joke if you are not a father….  That would be a faux pa…..  😊

 
 
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.

Happy Friday the 13th!!!
 
Here is the Uncle Sean Update for 8/13/21:
 

• JPMorgan Chase launched a real-time payments option called "request for pay" that enables “corporate clients to send payment requests to the bank's roughly 57 million retail clients who use its app or website, cutting the cost and time it takes for those companies to get paid”. 
  • I admit it, at first I laughed thinking “all I have to do is delete the message” – LOL.  However, this does make sense when you think about transactions that still occur with a check including most business accounts payable and many retail B2C service transactions (home and auto repairs, etc.).  For example – I have a propane tank that I use to heat my house.  The vendor that I use to fill my tank charges a 3% fee for card payments (hey that 3% fee on my 500 gallon tank is enough to buy Uncle Sean a case of beer), so I always just write them a check.  Each time that check takes about a week to clear my account.  Which means that the JPM RTP payment solution would benefit that vendor a full weeks worth of cash flow for every transaction.

 

• Six months after initial application for a bank charter, Brex has withdrawn their ILC Charter application from Utah DFI and FDIC in order to “modify and strengthen” their application and “resubmit at a later date.”

 

• Alchemy Pay announced Virtual Crypto Mastercard and Visa Card Services converting crypto to fiat to “speed up the use of cryptocurrencies in the payments sector.”  Currently undergoing beta testing in multiple key markets, the company expects the virtual card services to be fully launched at the end of 2021 or early 2022.  According to this PYMNTS.com article, Alchemy Pay “plans to offer its virtual card services as a full suite white-label service to crypto projects and businesses as well as traditional institutions looking to integrate crypto-related solutions.”

 

• There was a host of M&A activity this week:
  • Paymentus (NYSE: PAY) announced an agreement to acquire Payveris for $152.2M in a mixed deal of approximately 56% in cash and 44% stock.
  • Robinhood paid $140M to acquire Say Technologies in an all-cash transaction.
  • Truist paid $2B to acquire Service Finance (POS lender for the home improvement industry).
  • Zilch (UK BNPL) enters the U.S. market by announcing an agreement to acquire NepFin (marketplace lender for SMB’s).  Unlike other BNPL firms, Zilch “allows customers to pay in interest-free instalments at any online retailer where Mastercard is accepted, not just the ones supported by its platform.”
  • U.S. Bank strengthens their SMB banking business by acquiring fintech challenger Bento for Business.  Food for thought - It will be interesting to see how they integrate Bento AP payments into / alongside their existing Elavon card and mobile-wallet receipts platform.
  • We saw a couple of CU acquisitions of banks (and I am hearing that there are more to come).  A quick look at the FedFis Bank M&A database (yep – that’s a plug) shows that this totals 8 CU acquisitions of a bank this year and the third deal in the last 7 days (WOW):
    • Orion Federal Credit Union (Charter #24831; $1.02B Total Assets) announced an agreement to acquire Financial Federal Bank (Cert #31840; $751M Total Assets).
    • Royal Credit Union (Charter #66834; $3.76B Total Assets) announced an agreement to acquire Lake Area Bank in Minnesota (Cert #1390; $438M Total Assets).

 

• Frich (social finance app) goes live in the US.  Here are some Uncle Sean revelations (give us a shout if you need some research / analysis done):
  • Frich has a Mastercard debit card coming soon (unknown who the issuer is just yet) and they are using Sila for infrastructure KYC and EFT / ACH.  Sila in turn is partnered with Evolve Bank & Trust (similar to how Dwolla uses Veridian Credit Union).

 

• ZenBusiness (fka Joust) launched ZenBusiness Money and “includes capabilities to send and customize invoices, accept credit card and bank transfer payments, and manage income with a dashboard across users’ mobile, tablet and desktop devices” to their nearly 200,000 customers.

 

• Paypal announced that their Venmo Credit Card now has Cash Back to Crypto rewards feature described as “a new way for Venmo Credit Card customers to automatically purchase cryptocurrency from their Venmo account using cash back earned from their card purchases.”

 

• Plaid forks out a cool $58M to settle data privacy case claims that Plaid used consumers’ banking login credentials to gather and distribute detailed financial data without their consent.  If you really want to, you can read the 45-page settlement memo here.  To be fair, here is Plaid's response and continued commitment to consumer privacy.

 

• Poly Network (protocol for swapping tokens across multiple blockchains) gets the dubious distinction of experiencing the largest DeFi hack thus far at $611M in crypto stolen - but this story gets interesting quick.  Pretty much all of the $611M has been returned and the hacker claims they carried out the theft “for fun” and that it was “always the plan” to eventually return the funds (yeah, right).  There is significant speculation that the hackers began returning the stolen crypto because they were discovered (or were very close to being discovered) by blockchain security firm Slowmist.

 

• Circle announced their plans to file to become a national digital currency bank and operate under the supervision of the Federal Reserve, U.S. Treasury, Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) which appears to be way beyond just a National Trust charter.  This may be a preemptive maneuver anticipating significant regulatory oversight in the very near future (see SEC seeks more regulatory authority over crypto as well as Fed Reserve calls for stronger regulatory framework around stablecoins); or possibly a marketing response to the brutal Paxos blog a few weeks ago (specifically calling out Circle) showing the differences in stablecoins and the need for consistent regulation (Paxos stablecoins reserved at 96% cash and 4% US Treasuries whereas Circle USDC reserves at 61% cash, 13% Yankee CD’s, 12% US Treasuries, and 14+% in commercial paper, corporate and muni bonds).  My gut tells me it’s both.

 

• Brian Brooks (former head of the OCC) resigned as Binance.US CEO just three months into the job citing “differences in strategic direction.”

 

• Fintech funding continues to run hot this week:
  • Canopy raised $15M Series A funding round after experiencing 4.5X customer growth in the first half of 2021.
  • FalconX (crypto trading platform) raised $210M in Series C at a $3.75B valuation. 
  • Gusto (payroll, HR, and benefits platform) raised $175M in Series E with a $9.75B valuation (according to Forbes) and touting over 200,000 business customers.  
  • Tessian (cyber security) raised an additional $9M Series C extension (to $74M total).
  • Upgrade (online lending platform) raised $105M in Series E funding round with a valuation of $3.325B.
  • Trust (corporate card + marketing community platform) raised $9M Seed Round.
  • TaxBit (tax and accounting software for crypto) raised $130M in Series B funding round with a $1.33B Unicorn valuation.  Since their last funding round in March, “the company has tripled its headcount to about 100 people, launched an office in Seattle, deployed services with the IRS and inked partnerships with a number of digital asset platforms” including Coinbase, BlockFi and Gemini.
  • Klover (wage advance ad-tech platform) raised $60M in Series A funding.

 

• We lost the legendary football coach Mr. Bobby Bowden this week.  Quite possibly the only thing that eclipses his hall of fame coaching career is the almost endless comments about how great of a person he was outside of coaching with the mantra “faith, family, football.”  Here are some very good articles regarding Bobby Bowden’s life and career from ABC news and CBS Sports.
  • Couple of quick stats – 377 total wins and two national championships.  His 34-year tenure at Florida State included 12 ACC titles and an incredible 14 straight seasons (1987 – 2000) where FSU finished in the AP top 5. 

 
 
Random Uncle Sean Stuff:

• 14 days until college football!!!
• Strange factoid – did you know that rabbits can’t puke?  Seriously - their digestive system only goes one way, so they eat plenty of roughage, which keeps things moving in the right direction.  You’re welcome!  LOL!!!!
• And a couple of quick Dad Jokes for you:
  • Not to brag too much, but I got the high score on my scale today!
  • If there was a pill to cure procrastination, I’d probably take it tomorrow…
  • Aunt Patty suddenly turned to me and said, “you weren’t even listening, were you?”  And I thought to myself, “well that’s an odd way to start a conversation.”  Hehehehehe!!!!

 
 
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.