Uncle Sean's Update - 5/20/22

Happy Friday!!!
 
Fintech, Banking, Data – it’s in our DNA.  Don’t forget to sign up here to have the Uncle Sean Update delivered straight to your inbox each week.  Here is the Uncle Sean Update for 5/20/22:
 

• Tons of great things happening in Bankers Helping Bankers this week; and I am very excited to give some virtual high fives to these great firms (with tremendous employees):
  • Unifimoney, a turn-key multi-asset digital wealth management platform for community banks and credit unions, shows their dedication to community banking by partnering with the Banking Helping Bankers platform.  Special thank you to Ben Soppitt and the entire Unifimoney Team for supporting BHB!!!
  • Travillian, a nationally focused executive search, strategy and talent advisory boutique dedicated to the financial services industry, becomes the latest to join the BHB BaaS Association as the go-to talent advisory partner with the Association.  High five to Brian Love, Keith Daly and the Travillian Team!!!

 

• Congratulations to Agility Bank as the nation’s latest de novo digital bank!!!!  Agility Bank announced that they have received all approvals to open as an OCC Minority Depository Institution (MDI) charter.  Agility Bank opens on Monday, May 23rd – GREAT job to Lauren Sparks (100% legit Rock Star) and the entire Agility Bank Team!

 

• Curt Queyrouze joins Coastal Community Bank as President.  Coastal Community Bank is a leading sponsor bank in the U.S. through Coastal’s CCBX BaaS / FinTech division.
  • Uncle Sean is very excited to see what Eric Sprink and Curt Queyrouze accomplish together!!!

 

• Ponce Bank (NASDAQ: PDLB) disclosed a $6.3M write-off and $1.7M in additional reserves in their 1Q2022 Earnings Announcement “relating to the Bank’s lending relationship with Grain Technologies, Inc. (‘Grain’)” fintech sponsorship…..  OUCH!!!!  😲
  • In a May 5th 8-K filing, Ponce stated that Grain "has been victimized by cyber fraud using synthetic and other forms of fraudulent identifications, a phenomenon that has become prevalent with FinTechs."  The filing also states that “Grain originates and services these microloans and is responsible for maintaining compliance with the Bank's origination and servicing standards, as well as applicable regulatory and legal requirements.”
    • Also disclosed in the 8-K is a pending lawsuit where Grain has sued a third party vendor for the fraudulent loan originations due to “synthetic identifications that Grain’s vendor failed to identify.”  Oops!!!
  • In total, 24,719 microloans amounting to $17M have been deemed to be fraudulent.  $11.8M remain outstanding as of March 31, but Ponce write off roughly $6.3M and provided additional reserves of $1.7M after applying a $1.6 million security deposit set-off, leaving a net balance of $2.2 million at March 31.  Ponce also maintains a $1M equity investment in Grain.
  • As stated in the 8-K, Grain intends to make Ponce whole upon completion of a Series A (yeah – just what a VC wants to hear), but Ponce also acknowledges that Grain “remains a pre-profit startup” and that further capital raises “may not materialize.”

 

• Transamerica launches Workplace Emergency Savings Accounts (ESA) for employers as an employee benefit.  It’s a savings DDA that can be funded via paycheck deductions as well as employer contributions via Millennium Trust Company and / or SecureSave (custodial savings account held at Wells Fargo).

 

• Greenlight (teen and family banking app) is launching their Family Cash Card a Mastercard credit card issued by First National Bank of Omaha (FNBO).  A little more digging shows us that the Greenlight Family Cash Card was a product of Marqeta’s modern credit card platform in partnership with FNBO – very cool!
  • Rewards on the Family Cash Card credit card range from 1% - 3% based on spend and can be returned in cash or auto-invested in a range of stocks and/or ETF’s in the app (Greenlight is partnered with DriveWealth on the RIA / SIPC side).

 

• Speaking of….  Marqeta (Nasdaq: MQ) announced this week the addition of Evolve Bank & Trust as Bank Partner to expand Marqeta’s program management capabilities.  As one of the premier sponsor banks and BaaS provider in the U.S., Evolve Bank & Trust will “support the full range of Marqeta’s program management capabilities, including BIN management, on-demand fulfillment, compliance reporting, and settlement services.”
  • However, if you were looking closely, you saw this mentioned last week as part of Marqeta’s 1Q2022 earnings announcement showing strong continued growth and impressive 2Q2022 guidance.

 

• Plaid had a busy week announcing the launch of Data Connectivity solutions (Core Exchange and Plaid Exchange) as well as Identity Verification (IDV) KYC and Monitor for AML and PEP.  Plaid Identity Verification and Plaid Monitor combined allows for a full-stack customer onboarding experience.
  • TechCrunch has a good summary here focusing on Plaid’s move towards identity and income verification, fraud prevention, and account funding – with specific reference to their recent $250M acquisition of Cognito.

 

• FTX (crypto exchange) has been busy as well lately.  FTX US announced an expansion beyond crypto to allow customers trade and invest in hundreds of US stocks and ETF’s by launching FTX Stocks - a free, no-fee, no payment for order flow (PFOF) platform.  Just last week, FTX US applied for New York State trust charter; and don’t forget about FTX CEO, Sam Bankman-Fried, recently acquired 7.6% of Robinhood outstanding shares which certainly raised a lot of eyebrows.
  • By the way, have you seen the FTX US Debit Card (Visa debit card issued by Evolve Bank & Trust)?

 

• The Federal Reserve finalized a rule that will allow banks to delay FedNow instant payments to prevent fraud. 
  • As Tanner Mayo consistently points out, real-time settlements introduce real-time fraud risks.  Let’s hope that over time, the FedNow service enhances fraud prevention tools.

 

• CNBC announced their 10th annual Disrupter 50 list with many familiar names.

 

• Notable FinTech funding for the week:
  • Unit (fintech BaaS) raised $100M in Series C funding round at a $1.2B valuation.  “Unit has seen its transaction volume grow by 7x over the last six months. The startup has crossed an annualized transaction volume of $2.6 billion, issued over 430,000 cards to over 330,000 customers and saw a 10x increase in deposit volumes.”
  • Thought Machine (core banking technology) $160M in Series D round at a $2.7B valuation less than six months after their $200M Series C at a $1B+ valuation.
  • GravyStack (Teen banking and financial literacy app) raised $5.2M in Seed funding.
  • CertifID (wire fraud prevention and recovery) raised $12.5M in Series A funding round.  This company is exciting to me as they target law firms and title companies to protect them from wire fraud during mortgage payoffs, CRE transactions; as well as a fraud recovery service.  Check them out at certifid.com.
  • Keep Financial (employee retention platform) emerged from stealth and announced $9M Seed Round to accelerate their vesting cash plan as an employer retention benefit.  Think of this as 0% employee loans that are forgiven over a period of time / vesting schedule – thus the retention benefit.
  • SpotOn (POS software and payments solution for restaurants, retail, and enterprise venues) raised $300M in Series F funding round at a $3.6B valuation just 8 months after their Series E.
  • Velocity Global (global employment solution to simplify how companies onboard, pay, and manage talent) raised a whopping $400M in Series B increasing their valuation 7x over last year.

 
 
Random Uncle Sean Stuff:

• Now we have Monkeypox…???  Seriously, can we not catch a break???  Somehow, my mind immediately references The Wizard of Oz and those creepy flying monkeys…  😲  Ahhh yes, the classic movie musical that has been traumatizing children for over 80 years – LOL!!!!
• Okay – time for some Dad Jokes to kick off the weekend!!!!
  • If anyone knows Phillip, tell him I have a bunch of his screwdrivers.
  • While at the Optometrist, the doctor came in and said my results were ready.  I asked, “can I see them?”  He replied, “probably not.”  😃
  • Turns out that a monkey cannot in fact do my job.  Long story short, he got us both fired!!!
  • After receiving my blood work results, I texted Aunt Patty and told her “I’m at risk for diabetes type 1”….  And she texted back “1”…..  Touché Aunt Patty!!!  😊
  • The fear of giants is called feefiphobia.

 
 
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.