Uncle Sean's Update - 2/17/23

​Happy Friday!!!
 
Wow – what a wild week for divestiture news and regulatory smackdown in the crypto world!  Here is the Uncle Sean Update for 2/17/23:
 

• FIS announced it will spin off its merchant services business to be named (err re-named) Worldpay which it had acquired in 2019 for $43B ($35B Cash consideration plus $8M debt). 
  • Reuters noted that FIS took a $17.6B write-down of its merchant business as part of the spin-off effectively “undoing a $43 billion acquisition that went sour.” 

 

• Finastra is also exploring a $7B sale of its banking unit that provides core processing software to banks and CUs.

 

• Global Payments has agreed to sell its gaming solutions business for $415M to Parthenon Capital Partners furthering Global Payments emphasis towards corporate customers.  Recall back in August where Global Payments sold their Netspend consumer business for $1B.

 

• Not entirely unexpected, Black Knight (NYSE: BKI) is also reportedly looking to divest their Empower loan origination software in order to gain regulatory approval for their $13B planned sale to InterContinental Exchange (NYSE: ICE).

 

• Zelle continues to rapidly gain market share increasing 40% in 2022 to 1,800 financial institutions joining the Zelle Network®.  Some key 2022 stats:
  • 97% of the FI’s that joined in the last year were under $10B in assets.
  • Zelle processed 2.3 billion payments with total value of $629B.
  • Small business adoption using Zelle continues to be very strong.

 

• This makes me happy 😊 – two great firms doing great things together to help consumers!!!!!  DCI partners with Atomic for payroll connectivity allowing DCI customers to offer their account holders a quick and easy way “to set-up and switch direct deposits, enable early access to earned wages, and seamlessly verify a user’s income and employment status.”
  • “Partnering with Atomic helps us boost our digital banking solutions by digitizing direct deposit, and adding verify and earn solutions,” said Sarah Fankhauser, DCI’s President and CEO. “When a new partnership helps our banks keep competitive with the larger financial institutions, it’s a win-win for us all.”

 

• Mahalo Banking (CUSO providing online and mobile banking for CUs) announced the launch of its next-generation banking platform engineered to deliver “neurodiverse functionalities intended to improve accessibility and better accommodate the cognitive needs of all credit union members” by catering to members with neurodiverse abilities and cognitive distinctions such as dyslexia, autism, ADD, ADHD, epilepsy, visual sensitivity, ASD and more.

 

• Citizens Financial Group selects Paymentus (NYSE: PAY) for bill pay and money movement for their retail banking customers.

 

• AmeriSave Mortgage is now offering online unsecured personal loans from $5K - $50K.

 

• More C-Suite personnel updates this week:
  • Rocket Companies (NYSE: RKT) announced CEO transition plan with current CEO Jay Farner to retire effective June 1 and Bill Emerson to assume the role of interim CEO.
  • BankProv (Nasdaq: PVBC) announced Co-CEO Leadership Team appointing Carol Houle and Joe Reilly as Co-CEOs and Co-Presidents effective immediately.
  • Signature Bank (Nasdaq: SBNY) announced leadership transition plans where current Co-founder, President and CEO Joseph J. DePaolo will transition to a senior advisor role; and current COO Eric R. Howell will succeed DePaolo as President and will eventually transition to CEO as well.
  • Visa (NYSE: V) announced the retirement of CFO, Vasant Prabhu effective Sep 30, 2023.

 

• The FDIC demanded four entities cease making false or misleading representations about deposit insurance.

 

• WOW - The regulatory crackdown on crypto continues this week, but the SEC scope has expanded from staking to now include certain stablecoins as a security – which has the entire crypto industry on edge.  Let’s take a look at recent developments:
  • Bad news for Binance???  New York financial regulators ordered Paxos to stop issuing Binance stablecoin (BUSD).  Paxos is also facing potential litigation from the SEC claiming that the BUSD stablecoin is a security and therefore subject to securities law.
    • Paxos has issued a statement categorically disagreeing with the SEC, claiming BUSD is not a security.
      • Wired has a really good summary article titled “Confusion Spirals in Crypto as the US Cracks Down.”
  • Coinbase is taking aim back at the SEC (good luck with that BTW) stating their staking services not securities and will defend in court if needed.
    • To reiterate from the SEC press release - Kraken Settlement last week, “Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” said SEC Chair Gary Gensler. “Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”
      • Uncle Sean is reminded of the September speech where SEC Chairman Gary Gensler stated, “Not liking the message isn’t the same thing as not receiving it.”  Yep - LOL!!! 😲
  • The SEC is also proposing changes that would expand current RIA custody rules to include crypto assets – basically requiring companies that hold crypto assets to register as “qualified custodians.”
    • CNBC has a good summary here. 
  • But wait – there’s more!  The SEC has now charged TerraForm Labs with orchestrating a multi-billion dollar crypto asset securities fraud (recall the TerraUSD algorithmic stablecoin collapse that kicked off the crypto winter last year and a string of contagion bankruptcies).

 

• The US FTC ordered Moneygram to pay $115.8M to 40,000 victims of fraud for “failing to crack down on scammers using their payment system” as well as violations of previous settlements from 2009 and 2012 in which Moneygram agreed to take measures to prevent scammers from using its system to defraud consumers.  OUCH!

 

• Notable FinTech funding for the week:
  • Highbeam (eCommerce banking and financing) raised $10M in debt financing.
  • ModernFi (on demand deposit exchange marketplace) raised $4.5M in Seed funding.
  • Sandbox Banking (a low-code integration platform for FIs) raised $4.3M in Seed funding.
  • Comun (Latino focused immigrant banking app) raised $4.5M Seed Round.
  • Check this out!  GrainChain (blockchain enabled agricultural supply chain efficiency platform – yeah you read that right) raised $29M in capital funding to accelerate growth in the US and Latin America.  Per the press release, “The data company sits at the intersection of agtech and fintech with a suite of products that helps facilitate transactions and financing to agricultural players by digitizing the supply chain and reducing counterparty risk.”  For more info go to grainchain.io.
    • Agtech Fintech and counterparty risk - Uncle Sean absolutely loves this!!!!!  😊

 
 
Random Uncle Sean Stuff:

• Congrats to the Kansas City Chiefs for winning Super Bowl LVII in a spectacular come from behind 38 – 35 win over the Philadelphia Eagles.  No disrespect to Jalen Hurts who was AMAZING, but Patrick Mahomes put on a 4th quarter display that proved why he is the MVP.
• We made it to FRIDAY!!!!  Let’s get the weekend going with some Dad Jokes for good measure:
  • Hey Dad, do you know any good jokes about Sodium?  “Na….”
  • New tires are expensive because of….  inflation…  Okay, that one was terrible!!!!
  • All cat owners know that cats can memorize up to 120 commands.  They just don’t want to…
  • Ironically, procrastination is something that you can do immediately….
  • Always remember - beer doesn’t have a lot of vitamins, so you have to drink a lot 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.