Uncle Sean's Update - 8/27/21

Happy Friday!!!
 
Here is the Uncle Sean Update for 8/27/21:
 
Check out our Fintech Cowboys site (powered by FedFis data) where you can sign up to get the Uncle Sean Update emailed direct to your inbox.  While you are there, check out the Chris Williston (CEO of IBAT) interview - “… banks are saying maybe there is something to this fintech sponsorship or direct bank offering” – you betcha!!!!
 

• Stash gets the top spot on the Uncle Sean Update this week with the announcement of a multi-year partnership as the personal investing sponsor of the San Francisco 49ers.  So what does this mean???  Well, I’m glad you asked!  The 49ers and Stash will be bringing the Stash app as well as Stash101 financial literacy programs to Bay area adults and students through various initiatives including “free financial seminars, educational competitions for fans with participation from 49ers players, and virtual classes that teach the fundamentals of investing” that will be announced throughout the season.  But wait – it gets even better!!!!!  “The money skills training will be incorporated into the curriculum of the STEAM education field trips for Bay Area K-8 students hosted by the 49ers at Levi's® Stadium.” – GREAT job!!!!
  • More info - the Stash101 program is designed for parents and educators to provide a free simulated banking and investing platform that teaches financial literacy to children (you already know Uncle Sean is a huge proponent of financial literacy in our K-12 schools, so I am definitely excited to see this).
  • Always remember - “Wealth does not create financial literacy, rather it is financial literacy that creates wealth and ultimately financial independence.” – Uncle Sean 😊

 

• Coinbase finds themselves at the center of a controversy this week due to a CNBC Report detailing hacked customer account takeovers followed by “terrible customer service” from the company.
  • In fairness to Coinbase the article references PC hacks and SIM Swapping on mobile devices, not a Coinbase hack job.  However, it is still very unfortunate since these are crypto exchange / blockchain transactions and as such, they are not reversible.
  • The article mentions 11,000 complaints with the FTC and CFPB since 2016 mainly due to poor customer service; and 1,128 BBB complaints in the last three years.  Ouch!!!!

 

• Y’all know that Uncle Sean always geeks out a little too much regarding monetary policy and macroeconomic conditions – and this week is no different.  So, what happened at Jackson Hole this week?  Well the big news was that the Federal Reserve’s annual retreat at Jackson Hole, WY was moved to virtual only due to Covid Delta Variant concerns.  I legitimately feel bad for them because Jackson Hole is amazing!!!  Okay – here is a quick rundown:
  • It’s important to note that the Jackson Hole meeting is an economic symposium sponsored by the Federal Reserve Bank of Kansas City.  Not to be confused with an FOMC policy event.  So while Chairman Powell’s speech is highly anticipated, we need to reel in our expectations a little and know that only the FOMC can set monetary policy.  So, with the understanding that this is more of a strategy discussion, we can summarize Chairman Powell's speech (spoiler alert – pretty much the same as the July FOMC minutes):
    • Spiked inflation is primarily due to constrained supply and is deemed mostly transitory.
    • Labor markets have improved considerably; clear progress has been made for maximum employment; and wage increases do not appear to be placing undue stress on the pricing of goods and services (wage - price spiral).  However, 5.4% unemployment is still too high.
    • Delta Variant is still a near-term risk.
    • And the indicator we have all been waiting for….  If we continue on the present course of economic improvement, it may be appropriate to reduce asset purchases this year.

 

• Visa made headlines this week by purchasing a CryptoPunk NFT for $150,000 (actually it was 49.50 ETH facilitated by Anchorage Digital).  If you are shaking your head in disbelief or even in confusion as to WHY – consider this….  Visa just made headlines on CNBC, Forbes, Bloomberg, NBC, Yahoo, The New York Post, TheStreet, MarketWatch, CNET, tons of Art related media outlets, and every crypto / blockchain site you can think of for a mere $150K…. 
  • Ironically, you could argue that legacy payment rails have the most to lose related to blockchain, but for me personally – I am excited to see them embrace the new alternate technology (via Ethereum blockchain).  Check out Visa’s own Q&A with their resident crypto and NFT expert, Cuy Sheffield, titled NFTs mark a new chapter for digital commerce.
  • Of course I just can’t let this go - I know I posted this on the 4/2/21 Uncle Sean Update when it first came out, but here it is again – the Saturday Night Live music-video skit “What the Hell's an NFT?”  Hilarious 3 minutes!!!!

 

• Sezzle (BNPL) has confidentially filed a draft registration statement for a U.S. IPO.  You bet that Uncle Sean will be pouring through this S-1 once it becomes publicly available.

 

• GoDaddy (web domain registrar - NYSE: GDDY) sure feels like symbolism as to everything that is going on in FinTech / Neo Banks / embedded finance….  Check out their latest where they announced invoicing and payment solutions that enables web designers and developers to issue invoices and get paid through a simple integrated user interface…..  Maybe only a matter of time before they offer a business debit card and SMB capital loans….  Why wouldn’t you considering the multi-billion dollar valuations of Brex and Ramp….??? 

 

• Brex (neo business bank) announced the launch of Brex Venture Debt to allow select business customers access to debt financing.

 

• Klarna (BNPL) reached 20 million U.S. users and a 311% increase YoY in gross merchandise volume, but their 1H2021 financials show significant increase in credit losses (footnote 7 on page 35).  Klarna addresses this in the Business Overview by stating, “the share of first time Klarna consumers affects net credit losses, which is why new market entries are likely to entail higher credit loss rates during the initial phase as our credit models mature.”  Hmmm…..

 

• The Federal Reserve, FDIC, and OCC jointly issued a guide to help community banks evaluate fintech relationships titled Conducting Due Diligence on Financial Technology Companies - A Guide for Community Banks.  It’s a start…  However, I must admit that I laughed WAY too hard at the fact that the original FDIC link was broken and showed a 404 Page Not Found error!!!!  All I could think of was, “we’re from the government and we’re here to help.”  LMAO!!!!!!

 

• It’s been a tough year thus far for high-profile cyberattacks (SolarWinds and Kaseya breach, Colonial Pipeline hack, and supply disruption at meatpacker JBS) and the White House calls in the big dogs to encourage private sector support of cybersecurity as a “core national security challenge.”  Afterwards, the White House posted a host of ambitious commitments and initiatives as a result of the meeting.

 

• Airwallex (Australian based cross-border remittances for business) has launched in the U.S. utilizing Evolve Bank & Trust as their BaaS sponsor bank with a Visa business debit card coming soon.

 

• More FinTech funding updates this week:
  • Zepz (fka WorldRemit, a digital cross-border payments company) raised  $292M in Series E at a $5B valuation.
  • Ramp raised $300M in Series C at a $3.9B valuation citing a 5X increase in the number of cardholders on the platform since Jan 1; a total of 2,000 U.S. businesses using Ramp; and a 3X increase in transaction volume since the last funding raise in April.  This is up from their $1.6B valuation in April – yep, just 4 months ago (a valuation increase of $600M per month).
  • Hunters (cybersecurity) raised $30M in Series B $30M in Series B funding.
  • Balance (B2B ecommerce payments platform) raised $25M in Series A round.
  • Zeal (fka Puzzl, an embedded payroll API) raised $13M in Series A.

 
 
Random Uncle Sean Stuff:

• College football is here!!!!  Uncle Sean will be tuning in to watch Shawn Sinner’s Nebraska Cornhuskers take on Illinois on Fox at Noon CDT!
• Okay – couple of quick jokes to get you through the day:
  • The farmer allows people to cross the pasture for free….  But the bull charges….  LOL!
  • If Teflon doesn’t stick to anything, how do they get it to stay in the pan???
  • Why is abbreviation such a long word???
  • I’ve always wanted to learn how to juggle, but I’ve never had the balls…  uh, I mean bowling pins to do it….
  • Aunt Patty told me to put ketchup on the grocery list – now I can’t read any 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.
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