Uncle Sean's Update - 1/28/22

Happy Friday!!!
 
WOW – what a crazy busy week, so let’s get to it!  Here is the Uncle Sean Update for 1/28/22:
 

• It’s Fed Week!!!!!  Uncle Sean always geeks out a little too much here so feel free to scroll down if this bores the heck out of you – LOL!  The FOMC did not raise rates and continued the accelerated taper (bond buying to end in March).  BUT – forward guidance was given and a rate increase is on the agenda for March citing high inflation and strong job market.
  • For reference, here is the FOMC press release, Chairman Powell’s Press Conference transcript (26 pages), and a CNBC summary.
  • Additionally, here is a little more macro-economic information:
    • The Bureau of Labor Statistics (BLS) has CPI at a 40 year high at 7% as of December and unemployment back to pre-pandemic lows of 3.9% as of December (down from a high of 14.7% in April 2020).
    • The core Personal Consumption Expenditures index (PCE), which is what the Fed primarily relies on and kind of aligns with core CPI, came in at 4.9% year over year – the fastest gain since Sept 1983 (another 40 year high).
    • The Bureau of Economic Analysis (BEA) reported GDP growth for the fourth quarter at 6.9% annualized versus expectations of 5.5% (and compared to 2.3% annualized for third quarter). 
      • However, if you exclude “nonfarm private inventories” (businesses rebuilding inventory due to continued supply chain improvements – basically restocking), actual GDP ended at a much more subdued level of 2% annualized for the quarter.  Now that is interesting!!!!

 

• We had another great recorded video event in Bankers Helping Bankers this month - this time from Chris Bedel with Bedel Security covering bank focused trends and threats in cybersecurity, creating a positive bank culture surrounding security, and easy dashboard reporting metrics for community bankers and their Board.  This was not your typical “sleepy” bank security presentation – Chris was AWESOME and his presentation kept us all riveted!!!!

 

• Visa stated that customers made $2.5B in payments with its crypto-linked cards in its fiscal first quarter of 2022 earnings call (Oct – Dec on a calendar basis) which was 70% of the company’s crypto volume for all of fiscal 2021.  WOW!!!!

 

• Walmart (Hazle) took a big step forward with their fintech goals this week as they announced the acquisition of One and Even giving Walmart full mobile challenger bank offerings.  A quick look into the FedFis FinTech Analytics© platform (see what I did there) shows us:
  • Even is mostly known as an early wage access (EWA) platform, but they are really an employer-sponsored PFM app that enables EWA, high-interest savings (Cross River is the Sponsor bank), and budgeting tools.
  • One is more of a full challenger fintech / neobank offering credit builder, personal loans, Mastercard debit card, savings, P2P, and more – Sponsor bank for One is Coastal Community Bank.
    • Just reminiscing - If you remember when PNC (oops, I mean BBVA – yeah, right LOL) shut down Simple and Azlo, it was One that launched the very active campaign to attract the disenfranchised Simple customers.
  • It will be interesting to see what changes from a sponsor bank perspective as well as the fact that Finxact may have the most to lose – or potentially the most to gain depending on how Walmart (Hazle) pivots from here.  Reference - Finxact as system of record for One.

 

• UBS is acquiring US-based Wealthfront for $1.4B in cash.

 

• Reuters is reporting that PE firms are lining up bids to acquire MoneyGram.  Not completely surprising considering the intense competitive pressures in the cross-border and P2P space.  Also, MoneyGram is no stranger as an acquisition target - recall in 2018 when the US blocked MoneyGram $1.2B acquisition by Ant Financial (China).

 

• Zip (BNPL – fka QuadPay) is in talks to acquire Sezzle, both of which have an active presence in the U.S.

 

• And just like that, Facebook’s (errr Meta) stablecoin endeavor is over… for now….  Subject to constant regulatory scrutiny since Facebook launched Diem (fka Libra) in 2019, they have decided to scrap the platform and sell Diem to Silvergate Bank for $200M.

 

• The CSBS released their 4Q21 Community Bank Sentiment Index (CBSI).  Overall sentiment is slightly more positive than last quarter, but regulatory burden and profitability concerns are significantly dampening future outlook (I know – shocking, right?!?! LOL) with cyberattacks leading the way of future concerns.

 

• Meanwhile, our emboldened CFPB has now set their sights on "junk fees" charged by banks and financial companies by seeking public input on fees associated with “their bank, credit union, prepaid or credit card account, mortgage, loan, or payment transfers.”

 

• Experian allows consumers with no credit history (dubbed “credit invisibles”) to create their own credit report via Experian Go and Experian Boost linking banking data and recurring bills to their credit report.

 

• Keeping an eye on this one as it could get interesting just considering the number of iPhones in the US if nothing else…..  Apple continues to build out their fintech services (CC, BNPL, Apple Pay, Apple Wallet with digital driver license, etc.) – an now reports are out stating iPhone to accept credit card payments without any extra hardware (card reader) using NFC technology – essentially “tap to pay”… 
  • Could pose a threat to Square (Block) in the SMB arena.  Per the article, Square currently charges $299 for the device and a fee of 2.6% plus 10 cents for every transaction.  It remains to be seen what Apple intends to charge.

 

• Congrats to USF FCU in Florida for receiving their CDFI Designation – very cool!!!

 

• Uncle Sean typically does not like to report on speculation or rumor mill activity – HOWEVER (LOL), it appears that Chime has hired Goldman Sachs to help with preparations for an IPO.  Of course all of this is according to anonymous sources.  Guess we will continue to wait and see; but I can’t hardly wait to dig into their financial statements!!!

 

• FinTech funding for the week (someone left the gate open and the unicorns are running wild):
  • FTX US (the US division of cryptocurrency exchange FTX) raised a whopping $400M in Series A at an enormous $8B valuation – DANG!!!!
  • Anitian (zero trust cloud security platform) raised $55M in Series B funding round
  • Vartana (BNPL for B2B) raised $57M in funding comprised of $7M in equity and $50M in a credit facility.  Vartana strives to offer financing for terms of 12 to 60 months. 
    • I may be getting old, but we used to refer to this as just ‘business financing’….  But I guess that doesn’t sound quite as cool as BNPL for B2B!
  • Personetics (AI-driven customer engagement platform for financial services) raised $85M in growth funding.  Valuation was not disclosed.
  • Virtru (zero trust cybersecurity platform) raised $60M in growth financing round
  • Routefusion (international payments API) raised $10.5M in a "seed prime" add-on round (total to date of $14.1M)
  • SavvyMoney (credit score solution for online and mobile banking) raised $45M in growth funding.  Valuation was not disclosed but the company stated 3X revenue growth over the last 24 months and almost 800 financial institutions as more FI’s look to offer credit score-powered solutions.
  • Fireblocks (crypto infrastructure) raised $550M in Series E and quadruples their valuation in the last six months to $8B – WHOA!!!!
    • This is an update as Uncle Sean previously reported back in December that Fireblocks was in the process of raising a $400M Series E
  • CoinTracker (crypto portfolio tracker and tax calculator) raised $100M in Series A funding round at a $1.3B valuation – that’s pretty stout for an A round!
  • Esusu (alternative credit reporting) raised $130B in Series B round at a $1B valuation
  • Ascend (API-based insurance payments platform) raised $30M in Series A funding plus a $250M lending commitment to finance insurance premium loans (think BNPL for policy premium)
  • Polly (mortgage capital markets platform) raised $37M in Series B and has increased customer count nearly 3X over the last year
  • Vesta (mortgage LOS platform) raised $30M in Series A funding round
  • Veriff (global identity verification) raised $100M in Series C at a $1.5B valuation as the online identity verification market explodes
  • Blockdaemon (crypto infrastructure) raised $207M in Series C funding at a $3.25B valuation

 
 
Random Uncle Sean Stuff:

• Funniest thing I saw this week was from TheStreet – “has anyone tried unplugging the stock market and plugging it back in?”
• Pittsburgh Steelers Quarterback Ben Roethlisberger retires after 18 years in the NFL – all with the Steelers – amassing a record of 165-81-1 with over 64,000 passing yards, 418 touchdowns, 41 fourth quarter comebacks, and 53 game winning drives including three Super Bowl appearances with two victories.  Hall of Fame talks have already begun.
• Former Red Sox slugger David Ortis (Big Papi) inducted into Baseball Hall of Fame while Barry Bonds and Roger Clemens, in their final year of eligibility, were left out.
• And we MUST kick this weekend off with some killer Dad Jokes:
  • How do you stop Canadian Bacon from curling in the pan?  You take away their little brooms….
  • What kind of snake is exactly 3.14 meters long?  A Pi-thon!  😊
  • And my personal favorite for the week….. 
    • “Forget about Kryptonite…  I heard that ex-lax knocked the crap out of superman!!!!”  BWAHAHAHAHA!!!!!

 
 
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.