Uncle Sean's Update - March 19

Happy Friday!!!
 
Here is the long awaited Uncle Sean Update for 3/19/21:
 

• It’s Fed Week (yes, I dig it a little too much - LOL)!!!  On Wednesday, the Fed issued their FOMC statement.  In summary, the economy is getting better & stronger, but there is still a ways to go; and unemployment still a concern.  As completely expected (again), the Fed plans to remain accommodative and keep interest rates at zero until the cows come home (probably 2023); and continue the sizeable QE era bond buying program at the consistent rate of at least $120B per month ($80B+ in Treasury securities and $40B+ in MBS) as long as is needed.  Additionally, the long-term inflation target remains at 2% (on average for an “extended period of time”, not just in a transitory basis); and will be striving for maximum employment.  If you want to geek out even more, you can refer to the Fed’s Summary of Economic Projections in detail.

 

• Hey, here’s some good news – the IRS announced that the federal tax deadline for individuals has been extended from April 15 to May 17, 2021 for the 2020 tax year.  I love procrastinating, especially when it comes to my taxes – LOL!!!!

 

• Take a look at LendingClub Bank 4Q2020 Investor Presentation for yet another example of the value of a bank charter to a fintech.  On page 12, LendingClub estimates a 90% reduction in funding costs that equates to $30M in cost savings per year for every $1B in deposit funding.  Their acquisition of Radius Bank added $2B in deposits which means that they have already achieved $60M in cost savings per year going forward – just in cost of funds alone.  CHA-CHING!!!!!

 

• Now this is pretty cool and could become a new innovative trend in a digital friendly world…  In advance of Coinbase's Direct Listing, as opposed to the traditional investor “Road Show”, Coinbase is releasing their Investor Education Resources series through videos and launching a Reddit “Ask Us Anything” venue.  Here is their amended S-1 if you really want to get weird and dig into the numbers.

 

• Stripe reaches $95B valuation amongst $600M Series H capital raise.  That’s quite a valuation jump considering Stripe’s previous capital raise last April was $600M at a $36B valuation.  Stripe said they will “use the capital to invest in its European operations, and its Dublin headquarters in particular, support surging demand from enterprise heavyweights across Europe, and expand its Global Payments and Treasury Network.  Enterprise revenue is now both Stripe’s largest and its fastest growing segment, more than doubling year over year.”  It’s worth noting that Stripe has 50 merchant customers that process $1B+ annually; and Stripe signed up over 200,000 customers in Europe in 2020 alone – That’s impressive!!!!

 

• Visa and Mastercard have both agreed to delay fee hike (primarily in online credit card fees – i.e. card not present interchange) until April 2022 while the economy continues to recover.  Now hang on a minute - before we start shooting arrows at these behemoth processors for trying to increase fees on merchants during a pandemic (because that’s what politicians want you to believe), it is only fair to mention that this is nothing new as Visa and Mastercard regularly adjust interchange rate schedules each year.  In fact, these fees were already supposed to take effect last April (yes, 2020), but were voluntarily delayed until this April, and now are being voluntarily delayed again until April 2022 - all while facing increased costs as the world launched ahead to a digital-first economy.  And now you know the rest of the story (yep – that’s an intentional nod to the late Paul Harvey).

 

• The Senate confirmed on Tuesday, Isabel Guzman to lead the Small Business Administration and oversee Covid-19 initiatives including the PPP.

 

• Here is a quick heads-up in case you missed it – Nacha announced that they are expanding same day ACH availability by 2 hours every business day effective March 19, 2021.  “Currently, the latest that an ODFI can submit files of Same Day ACH transactions to an ACH Operator is 2:45 p.m. ET (11:45 a.m. PT).  The new window will allow Same Day ACH files to be submitted until 4:45 p.m. ET (1:45 p.m. PT), providing greater access for all ODFIs and their customers.”  This means that interbank settlement for these entries in the third same day ACH window will occur at 6:00 pm ET.

 

• Online lender Upstart (UPST) announced that they have agreed to acquire Prodigy Software, an end-to-end digital platform for car dealerships that works with existing lenders.  “With the acquisition of Prodigy, Upstart will accelerate its efforts to offer AI-enabled auto loans through the tens of thousands of auto dealers nationwide where the majority of auto loans are originated.”

 

• Blend (a BaaS cloud-based consumer lending platform) announced a definitive agreement to acquire Title365 (title, escrow, and settlement company) for approximately $422M.  This comes just a couple of months after Blend raised $300M in Series Gfunding round.  PYMNTS has a really good Interview with Blend Head of Finance, Marc Greenberg where he discusses the need and Blend’s solution to the vertical digital integration of the entire home buying process into a single unified platform delivering both speed and efficiency.  Uncle Sean agrees!  Having bought and sold about half a dozen homes in my life (so far), I have always felt that the process was way more complicated than it needed to be – not to mention SLOWER THAN MOLASSES IN THE WINTER!

 

• Socure raised $100M in Series D funding round launching them into Unicorn status at $1.3B valuation.  Socure is a leader in the Identity Verification, KYC/AML and Document Verification space.  This Series D round comes less than six months after they raised $35M for a total funding to date of $196M.

 

• Immediate announced $15.5M capital raise split between growth equity and a working capital facility.  Immediate is in the red hot Earned Wage Access (EWA) space.  With their HR/payroll integration they can advance up to 50% of eligible wages either to an employee’s linked bank account or to a prepaid Visa debit card via Visa Direct in real-time.

 

• Crypto custody firm Fireblocks raised $133M in Series C funding bringing their total funding to date to $179M.

 

• Check out my ole buddies over at Samsung in South Korea getting it done with Mastercard as they announce an upcoming launch of a biometric payment card that allows users to authenticate transactions using their fingerprint.

 
It is a SUPER nice day outside today so Uncle Sean is gonna try to sneak out a little early and fire up the BBQ grill.  P.S. Don’t tell my boss – he thinks I’m hard at work!!!!!
 
Random Uncle Sean Stuff:

• Tomorrow is the first day of SPRING!  Wow – what a difference a month makes!  About 30 days ago we were dealing with single digit temps, freezing rain, rolling blackouts, busted water lines, and ultimately about 5 inches of snow here in the Texas Hill Country.  Now I’m mowing the dang yard already, but I’m not complaining!
• Aunt Patty and I rented the movie Coming 2 America (the new sequel to the 1988 hit) the other evening and I cracked up the entire time – Uncle Sean gives it two thumbs up!
• Okay, okay – one quick Dad Joke……..  Getting your stimulus payment on St. Patrick’s Day must be the luck of the IRS….  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 - The Home of Fintech Banking Data
 
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.