Uncle Sean's Update - 3/18/22

​Happy Friday!!!
 
I don’t know about you, but that time change beat me up all week long.  All is well though as the first day of Spring is this Sunday – Woohoo!!!  Don’t forget to sign up here to have the Uncle Sean Update delivered straight to your inbox each week (all the cool kids are doin’ it).  And without further ado, here is the Uncle Sean Update for 3/18/22:

• Huge shout out to the Independent Bankers of Colorado (IBC) as the latest association of community bankers offering access to the Bankers Helping Bankers platform for their member banks in Colorado!!!  Welcome to the show!!!!!

• It’s Fed week – so pardon me while I completely geek out!!!  As expected, the Fed raised interest rates 0.25%.  This follows the end of the taper of QE / bond buying program of $120B per month as well.  While much of the economic data is screaming for a 50 bps rate hike, geopolitical concerns surrounding the war in Ukraine certainly dictate caution.  CNBC has a good summary indicating an aggressive path forward for the remainder of the year signaling 6 rate hikes and a consensus targeted funds rate of 1.9% by year end.  This is based on the Summary of Economic Projections (see page 2 for median fed funds rate projection as well as the much publicized “dot plot” on page 4).  If you want to get really weird (it’s okay, I do it too – it’ll be our secret), you can read the 26 page transcript of Chair Powell's Press Conference.
  • Uncle Sean goes “off the rails” here with some unsolicited op-ed, so feel free to scroll down 😊
    • I know I have said it before, but it bears repeating…..   Keep in mind that the Summary of Economic Projections (SEP) / “dot plot” is not a plan of action, even though most media outlets absolutely love it; and many publicize this as policy carved in stone.  It is simply a median of assumptions based on current economic forecasts.  These forecasts are highly variable and subject to change especially considering we are still in a global pandemic, still experiencing supply chain issues, labor shortages, etc. – not to mention the unknown impact of the war in Ukraine. 
    • Think of the dot plot kind of like the Treasury yield curve – it moves with time, and is a measure of current assumptions, but is not necessarily predictive policy.  DAMN – that was deep!!!! LOL
    • That being said, rising rates are generally a boon for banks; and probably not a good sign for challenger fintech companies with single-source revenue models (i.e. interchange only).  I suspect we will see some upcoming consolidation (or elimination) in this challenger bank space as VC money may be looking elsewhere for growth.  Might be a buying opportunity for banks to pick up a challenger / fintech as a direct digital bank if the tech stack is appropriate.

• A couple of weeks back, we mentioned Texas National Bank and their new direct / digital bank launch called Bankers Lender – a direct result of the Bankers Helping Bankers platform using the “sidecar core concept” as created by FedFis.  Now we have a little more insight to share as Data Center, Inc. (DCI) is the core for the direct digital bank and integrates directly with the existing core (not a replacement – i.e. the sidecar concept) of the bank.  This is a new and efficient approach to launching a direct digital bank as the bank will have two cores operating independently serving different parts of the business, yet completely integrated.  This is fantastic!!!!!

• Late last week, MeridianLink (owned by PE firm Thoma Bravo) announced an agreement to acquire StreetShares.  The StreetShares’ Atlas Program allows banks to be up and running in a fully digital business lending environment in 45 days or less (I have seen the product first hand and it is very cool).  Definitely looks like a good pairing for MeridianLink – and that StreetShares Team is awesome!!!

• Currencycloud and Moov are teaming up for payments opening up new capabilities for customers of both companies.  Making “moving money easier” is the premise behind both entities as Currencycloud tackles international payments (including currency exchange) while Moov accepts, stores, and disburses money domestically.   

• Worth noting – Nacha increased the limit on Same Day ACH to $1M effective today, March 18, up from the current cap of $100K that was set back in 2020.  Additionally, this Payments Dive article states that The Clearing House (operator of RTP) is also increasing the cap that can be sent on their real-time transfers to $1M on 4/18/22 – also up from $100K from 2020.
  • Definitely expect $ volumes to explode due to these increases.

• Klarna is now offering BNPL for US gasoline purchases…  Sheesh….  C’mon man!!!  Payments Journal has a good summary with the conclusion (that I wholeheartedly agree with) of “lenders have a responsibility to keep borrowers out of trouble.”
  • I believe that Klarna actually struck those deals with Chevron and Texaco last year, but advertising this now is probably not the best of ideas – and will likely garner even more attention from the CFPB…  Good luck!!!!  LOL!!!

• Ahh – now this is some GREAT news as everyone knows I am a HUGE advocate of financial literacy especially in our school system.  Visa and the Council for Economic Education announced the launch of FinEd50 to advocate for financial education for students across America. 
  • FinEd50 is a “nationwide coalition dedicated to state-level action that guarantees equitable access to personal finance courses and provides teachers with training and curricula on school-based financial education.”  YES!!!!!
    • Always remember, “Wealth does not create financial literacy, rather it is financial literacy that creates wealth and ultimately financial independence.” – Uncle Sean 😊

• Notable FinTech funding for the week:
  • ConsenSys (crypto developer and parent company of Ethereum-based MetaMask wallet) raised a massive $450M in Series D funding round at a whopping $7B valuation – almost double the valuation in four months!!!!
  • Aptos (blockchain startup founded by some of Facebook Meta’s former crypto team) raised $200M in a “strategic” investment; and while valuation was not disclosed, Aptos stated that they were “well off into the unicorn territory” as they build out their Layer-1 decentralized network.
  • Stellar (credit builder and bill pay app) raised $7M in initial funding pending their anticipated launch in May 2022.
  • Cowbell Cyber (cyber insurance & underwriting) raised $100M in Series B funding round.
  • EarnUp (mortgage industry payment and data solution) raised $31M in Series C.
  • Doxo (bill pay app) raised $18.5M in Series C funding.
  • Novel Capital (non-dilutive ARR financing) emerges from stealth mode with $115M in initial Equity and Debt funding.
  • Onuu (subscription based banking, financial literacy, and insurance platform) raised  $6M in Series A round.
  • Ponto (an API-driven blockchain infrastructure layer for global payments) $20M in Seed funding.  Wow – that is a huge seed round!  This paragraph in their press release sums everything up nicely, “In order to support neobanks, wallets, and mobile financial experiences being built around the world, Ponto provides regulatory infrastructure and APIs for developers building global banking and payments products on top of decentralized finance. By streamlining settlement, liquidity, compliance, and risk management, Ponto’s bank-grade solution enables borderless asset interoperability across blockchains and local currencies.”  Nice!!!!

 
 
Random Uncle Sean Stuff:

• Check out the giant floating drone QR code over Austin at the SXSW festival this week.  Made up of 400 drones by Sky Elements and measuring 300 feet tall (that’s the same height as the Statue of Liberty) by 600 feet wide, the fully functional/scannable QR code was part of a marketing campaign by Giant Spoon to promote the upcoming sci-fi series, Halo by Paramount +.  Pretty cool!
• While doing some research this week (okay, okay, I was surfing the internet - just don’t tell my boss!!!!!), I ran across these floating cabins at Lake Murry in southern Oklahoma.  This just might end up on Uncle Sean’s vacation destination short-list!!!! 
• And of course a couple of obligatory Dad Jokes:
  • I checked Kelley Blue Book for my car’s value, and it asked if the gas tank was full or empty…
  • My computer beat me in chess, but was no match for me in kick boxing!!!
  • In recognition of St. Patrick’s Day, here are a few for my fellow Irish brethren:
    • Brilliant Irish text message - “Mary, I’m just having one more pint with the lads.  If I’m not home in 20 minutes, read this message again.”
    • What do you call an Irishman sitting on the porch?  Paddy O’Furniture!!!!  😊

 
 
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 [email protected] | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | [email protected] #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.