Uncle Sean's Update - 2/11/22

Happy Friday!!!
 
Holy Cowabunga there was a lot going on this week!!!!  Here is the Uncle Sean Update for 2/11/22:
 
It’s Super Bowl Sunday!!!!!  In a sign of the times, it is worth noting that it is being played in SoFi Stadium (yep – congrats on that new bank charter).  Of course we all love the commercials featuring media stalwarts such as Budweiser, Pepsi, and Lays – but look at the rest of the lineup (signaling a recognized change in how we live our lives now) featuring Rocket Mortgage, Squarespace, Rakuten, Salesforce, DraftKings, Uber Eats, Crypto.com, Coinbase, and an FTX sponsored bitcoin giveaway during the second half.  Also worth mentioning is the fact that the NFL is issuing Super Bowl tickets as NFT's for everyone attending.
 
Now on to the rest of the Update:

• For the macroeconomic nerds like me (yeah baby)…  CPI came in super-hot again this week with January at 0.6% (estimate was a cooling to 0.4% which is a 50% miss) and 7.5% over last year which is the highest since February 1982.  Core CPI came in at 6% which is still a 40 year mark.  Basically, if you are under 60 years of age, you probably have not experienced anything like this as a working adult with financial responsibilities (here’s a glimpse of what life was like in 1982).  Keeping in mind that nothing over the last few years has been “normal” from a macroeconomic standpoint, so let’s not freak out too much - LOL.  Source - BLS CPI Summary report.
  • Of course I’m blaming all of this on the Dallas Cowboys for calling a QB Draw and running the ball up the middle for 17 yards on a second-and 1 down with no way to stop the clock as time expired thus losing the playoff wild-card game 23-17 to San Francisco.  C’MON MAN!!!  Deep breath, Uncle Sean…  Calm blue ocean…  Cool waters…  All is well…  😊

 

• Fiserv announced a definitive agreement to acquire remaining ownership of Finxact for $650M instantly accelerating Fiserv into the fintech and direct / digital banking space.

 

• Jack Henry announces Next-Generation Technology Strategy…..  Okay – so I read this no less than six times.  The words are in English, but I really had a hard time understanding what they were trying to say.  Let me try to break it down for you:
  • JKHY just announced an open platform Marketplace (think of this like an app store where you can select new technologies for your bank with an easy integration).  JKHY states that they already have more than 850 FI FinTech companies in their marketplace ecosystem.
  • So what does this mean???  If you are an FI with a JKHY Core OR (note that I said “or”, not “and”) JKHY Banno Online, you now have easy access/integration to emerging technologies.  This is exactly what bankers have been asking for; and it’s here now.
    • Uncle Sean broke his crystal ball years ago (back in the dot.com era - LOL), but I suspect that FIS and Fiserv will be following suit very soon.

 

• Global Payments puts Netspend consumer debit card business up for sale in order to focus more exclusively on B2B operations.

 

• DriveWealth adds cryptocurrency trading by acquiring acquiring Crypto-Systems.  CNBC has a good write-up focusing on the unsustainable fee structure with Coinbase and others as regulatory pressures tighten and competition increases.

 

• Betterment (wealth management / digital investment advisor) enters the crypto space by announcing the acquisition of Makara, an SEC-registered investment advisor offering automated cryptocurrency portfolios.

 

• M&T Bank joins the list of FI’s to revise overdraft policies.

 

• FIS Worldpay partners with Crypto.com to process global card-based purchases and sales of cryptocurrencies for Crypto.com.

 

• Acting FDIC Chair Martin J. Gruenberg reveals FDIC Priorities for 2022 including:
  • Strengthen Community Reinvestment Act (CRA)
  • Address Financial Risks Posed by Climate Change
  • Review Bank Merger Process
  • Evaluate Crypto-Asset Risks
  • Finalize Basel III Capital Rule

 

• American Express launched a high-yield online checking account with debit rewards for consumers.  However, I was a little bit surprised at the amount of press that got since Amex has several platforms already – a quick look into the FedFis FinTech Analytics© database (now that’s a nice plug) shows:
  • Bluebird by Amex is a prepaid GPR Amex and mobile app (after all, Amex is a nationally chartered bank) as well as a Visa debit card issued by Meta Bank - and of course Kabbage as a Direct / Digital Bank on the Business side

 

• Wirex goes live in the USA with crypto-linked Visa card that allow you to make purchases using crypto anywhere Visa is accepted with an added bonus of up to 8% “Cryptoback” rewards (more on that below).  And here is the rest of the story:
  • Once you fund your account in the Wirex mobile app, you can buy, sell, hold up to 37 cryptocurrencies
  • The Visa card is a virtual prepaid GPR issued by Sutton Bank.  Purchases made with the Visa Prepaid card are converted from Crypto to fiat in “near real-time” at point of sale.
  • Rewards are based on spending and are issued as X-Points (Wirex native token) that can be redeemed for any other crypto available in the Wirex app
    • Actual rewards % is based on your subscription level – free is only 2% rewards, $9.99 per month is 4%, and $29.99 per month is 8%

 

• The FBI issues Public Service Announcement regarding rapid increase in smartphone SIM swapping fraud.  “From January 2018 to December 2020, the FBI Internet Crime Complaint Center (IC3) received 320 complaints related to SIM swapping incidents with adjusted losses of approximately $12 million. In 2021, IC3 received 1,611 SIM swapping complaints with adjusted losses of more than $68 million.”  ZDNet has a good summary and states “don’t brag about your crypto online” and avoid using mobile SMS based two-factor authentication.
  • That’s an increase of more than 5X in one year over the last 3 years combined – OUCH!

 

• In one of the more colorful stories circulating this week, Ilya “Dutch” Lichtenstein and Heather Morgan were arrested in New York and are charged with conspiracy to commit money laundering and conspiracy to defraud the US in conjunction with the $4.5B Bitfinex hack back in 2016 – to which authorities have seized $3.6B in cryptocurrency linked to that hack.  If convicted, the couple could face up to 25 years in prison. 
  • Do yourself a favor and read this article from Reuters - self-proclaimed "Crocodile of Wall Street" arrested.  Make sure you check out the website links (razzlekhan) and rap songs for pure amusement.  I know I shouldn’t make fun, but this is just solid gold (pun intended).  LOL!!!!
  • If you want more, you can read the actual DOJ press release regarding the hack and subsequent arrest.

 

• Notable FinTech funding for the week:
  • Ramp (corporate card and business expense mgmt platform) raised $200M in capital which appears to be an undisclosed Series D at an $8B valuation!!!.  Previous $300M Series C was raised just six months ago in August 2021 at a $3.9B valuation – which was less than 5 months removed from their $115M Series B at a $1.6B valuation.  That’s a lot of capital over the last year!!!!
  • Happy Money (unsecured lender) raised $50M Series D-1 at a $1.1B valuation.
  • LoanStreet (FI lendtech platform) raised $25M in Series B funding round and eyes Canadian expansion.  Per the article, LoanStreet claims to have over 1,200 financial institutions as customers in the US.
  • Aleo (privacy focused blockchain applications platform) raised $200M in Series B
  • Alchemy (blockchain infrastructure) raised $200M in C1 round at a valuation of $10.2B – this comes just four months after their $250M Series C at a $3.5B valuation; and up considerably from their $80M Series B less than a year ago in April 2021 at a $505M valuation.  That’s over $1B in valuation growth per month over the last year - Holy Cow!!!
  • Shift5 (cybersecurity for critical transportation and military) raised $50M in Series B funding
  • OpenNode (bitcoin payment processor) raised $20M in Series A round at a $220M valuation.
  • Streetbeat (AI-driven strategy based investing app) raised $10M Seed Round touting 35,000 customers in the first 30-days of beta and increasing 18% per week – NICE!!!
  • Polygon (blockchain network) raised $450M in capital and states a valuation of $2B
  • Sardine (fraud and compliance platform for ACH & card settlement to fintech and crypto companies) raised $19.5M in Series A round

 
 
Random Uncle Sean Stuff:

• ALERT - With all the focus on the Super Bowl and crypto ads - DON’T FORGET THAT THE VERY NEXT DAY IS VALENTINE’S DAY!!!!!!!!!!  You’re welcome – LOL!
  • Speaking of Super Bowl crypto - have you seen the recent South Park spoof on Matt Damon bitcoin commercial (language warning at the beginning)?  I laughed way too hard at that!
• We’ve been crazy busy recently and I am late getting my onion sets planted in the ole garden.  Hoping to get that done this weekend and prune the rose bushes (Belinda’s Dream roses are a solid performer here in central Texas and one of my all-time favorites).  Ahhh – I love playing in the dirt!!!!
• Some quick Dad Jokes for you:
  • You ever meet someone and you just know instantly from that first moment that you want to spend your whole life without them?  LOL
  • I still think that Chef Bobby Flay should have named his daughter Sue….
  • If you don’t like the Uncle Sean Weekly Updates, you should probably get tested….  One of the symptoms of Covid is lack of taste…  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.