Uncle Sean's Update - 6/4/21

Happy Friday!!!!
 
It was a short but busy Holiday week; and we all had to cram a full work week into just a few days - LOL!!!!  Here is the Uncle Sean Update for 6/4/21:
 

• Overdraft fees have been taking center stage lately with many neo / challenger banks offering a “no fee” structure for overdrafts – not to mention the increased pressure from Capitol Hill (those hearings have been entertaining, if nothing else).  Many banks, in general, are taking notice and making changes in response to customer retention concerns – but the truth is that many of the largest banks have had no-overdraft programs for years (although several have a minimal monthly fee structure). 
  • Ally Bank  becomes the latest to cut all overdraft fees for their 3.6M accounts – which is impressive.  To their credit, Ally had waived overdraft fees between March and July last year during the peak of the pandemic unemployment impact.  They do not expect the fee waiver to be material to the income statement.
  • Huntington Bank is taking a slightly different approach by launching Standby Cash which is a line of credit giving eligible customers immediate access up to $1,000 with no interest or fees if customers sign up for automatic payments (otherwise, a 1% monthly interest charge, 12% APR, applies to outstanding balances).  Huntington estimates that this program may cost the bank up to $1M per month but will certainly create customer loyalty and potentially bring in new customers.
  • Back in April, PNC Bank announced “Low Cash Mode” which alerts customer through the mobile app and grants a 24 hour waiver for fees.  Initial pilot programs have shown a 60% discount on consumer overdraft fees.
  • Frost Bank also launched an overdraft grace feature up to $100 in April.
  • To be completely fair, many banks have had specific programs for years – Wells Fargo has Clear Access Banking, Fifth Third has Express Banking, Bank of America has Advantage SafeBalance Banking, Citi has Access Account Banking, and even JP Morgan Chase (Senator Elizabeth Warren’s favorite bank – LMAO) has Chase Secure.

 

• I know you probably saw it, but here’s a short update on legal happenings related to the OCC Fintech Charter….  Nothing really happened – again - LOL….  All kidding aside, here are a few non-impressive updates in case you are having trouble falling asleep (punchline is that the fight continues):
  • The three judges in the 2nd U.S. Circuit Court of Appeals reversed the 2019 lower court victory where New York Department of Financial Services argued (successfully at that time) that the OCC lacked the authority to issue such a charter. 
    • It’s the same premise that we have heard several times on this topic.  Since no such “fintech charter” has been granted by the OCC, and the NYDFS failed to prove that any harm has come to NYDFS, then there is no basis for the original 2019 ruling in favor of NYDFS.  Here is the appellate court 43 page ruling if you really want to get weird.
  • Also, as expected, the CSBS issued a statement stating that specific ruling was disappointing, and they are confident that the CSBS litigation pending in the DC District Court will determine that Congress has not given the OCC the authority to issue a national fintech charter.  The CSBS also encouraged “the OCC to abandon its pursuit of the chartering of uninsured national banks.”

 

• SoFi began trading this week (Nasdaq: SOFI).  SoFi said in a statement that it raised about $2.4B from the transaction to fuel growth, expand its markets and develop new products.

 

• It’s a date!!!  Marqeta filed a second amended S-1 earlier this week and will commence trading on June 9 according to the Nasdaq IPO schedule under the symbol MQ.  Shares are to be priced in the $20 - $24 range and values MQ at approximately $12B+.

 

• Mission Lane (credit builder fintech) acquired Honeydue – terms were not disclosed.  This is pretty cool as Mission Lane (the old credit card division spinoff from LendUp) helps consumers rebuild credit with their Visa credit card offerings.  Now with the acquisition of Honeydue (PFM App for couples) that provides a Visa prepaid GPR debit card, Mission Lane becomes a full Neo / Challenger Bank and avoids the dreaded “single source revenue model”.

 

• The Venture Center and FIS announce the ten growth stage companies to take part in the 2021 FIS Fintech Accelerator program.  They include: Array, Atomic, Bankifi, BankLabs, Informed.IQ, Long Game, OakNorth, Railz, TaxStatus, and Vymo.

 

• Kraken (cryptocurrency exchange) announced the launch of their mobile app designed for beginners to get into the buying and selling of 50+ cryptocurrencies 24/7/365 for U.S. customers in preset denominations ($20, $50, $100) or any custom amount.  The press release also mentioned that Bitcoin can be purchased for as little as $10.  The service is not available to New York or Washington state residents because of the "cost of maintaining regulatory compliance."  PaymentsDive has a good write-up here.

 

• Sezzle (BNPL) inks a 3-year contract with Target.  Sezzle’s interest-free installment (BNPL) product “will be used in-store and across Target’s digital platforms, providing guests access to interest-free payment plans for purchases made at Target.”

 

• ENACOMM and REDi are partnering together - ENACOMM will provide communication channels for REDi's alerts to all of its customers’ users, and ENACOMM will integrate REDi’s fraud prevention technologies into ENACOMM’s ViA® and Fraud Control Module offerings.  REDi will also provide ENACOMM its APIs to enable ENACOMM to package and resell REDi’s debit, fraud and card control solutions as part of ENACOMM’s product suite spanning the voice, mobile, and digital channels.

 

• And the FinTech funding continues:
  • Circle (crypto-services firm) raised a massive $440M in financing.  Valuation was not disclosed, but Circle said the funds will be used to drive market expansion and growth.  The stablecoin has become the world's fastest growing dollar digital currency, now standing at $22 billion in circulation. USDC has grown by 436% in 2021 alone, and over 28,000% over the past 12 months.
  • Truebill raised $45M in Series D funding round bringing the total valuation to $500M.  This Crunchbase article states that since November, Truebill has grown at a rate of 3.5X YoY Revenue; and their “active user base grew from 1 million to 2 million and is now analyzing more than 200 million monthly transactions for more than $40 billion in monthly transaction volume.”  Their last $17M Series C was just six months ago; and brings their total funding to $85M.
  • MotoRefi (auto loan refinancing platform) raised $45M in Series B funding round.  Valuation was not disclosed, but the company states 7x revenue and 5x volume growth YoY for 1Q21 and is on track to issue $1B in loans by the end of the year. 
  • Yieldstreet (alt investment platform) raised $100M in Series C and is on track to hit $100M in revenue for 2021.
  • Synctera raised $33M in Series A funding round and plans to use the funds to accelerate their Banking-as-a-Service platform.
  • Pinwheel (payroll API for direct deposit and VOE) raised $20M in Series A.

 
 
Random Uncle Sean Stuff:

• It is starting to feel a little more like “normal” again as we begin to evaluate our post-pandemic world.  Folks are traveling, going to conferences, and meeting in person with friends and family after a long, long 15 months of social distancing and isolation.  Me and Aunt Patty got to spend a few days with her family this past weekend; and were able to spend time, laugh, and hug friends and relatives that we haven’t seen in over a year.  It was nice.
• Ahhhh – here are some “clothes dryer diaries” for you….  So our dryer died (of course with wet clothes in it)….  Me and Aunt Patty did some quick internet research and decided to bite the bullet and get a new one.  We went to a large home improvement retailer that shall remain anonymous (but I can tell you that their colors are orange and white, and their initials are H.D.).  We settled on our new dryer and with that old familiar feeling of being proud parents of a major shiny new appliance, went to see the associate to complete our purchase.  To our complete dismay, we were informed that they do not stock appliances (except for a few “really cheap ones” – that is literally what she said) and it would take 4 – 6 weeks to get one delivered to us.  What???  We called two other locations of the same retailer and they all three told me the same thing – they don’t stock major appliances.  HOLY CRAP!!!!  What are you supposed to do when the dryer goes out???  Wait 4 – 6 weeks???  Does anyone really forecast 4 – 6 weeks in advance of a dryer failure???  LORDY LORD!!!!  Nice supply chain / product management (sarcasm)…  Maybe this is just a temporary thing due to Covid (I still really like that store by the way)???  So I did what any other prudent adult would do (not that I am prudent per se, but I do pretend to be sometimes)…  We went to another large home improvement retailer that shall remain anonymous (but I will tell you that their colors are blue and white, and their initials are L.o.w.e.’s) and found the exact same dryer (they had several in stock), purchased immediately, and they are delivering for free in three days.  Shocking that local product availability still matters in a digital world (yes – more sarcasm) – LOL!!!!   

 
 
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.