Chime’s massive fundraise & IPO plans 👀; Young consumers demand BNPL! 🗣; Walmart’s crypto hiring 😲
Good Morning FinTech. 24/30
Good morning Everyone,
And happy Tuesday! I hope Monday wasn’t that harsh for you… Here’s a mix of 3 stories to kick off your day and make it productive:
Chime’s massive fundraise & IPO plans 👀
The raise 💸 Neobank Chime has raised a whopping $750M in a Series G funding round that values the American digital banking giant at $25B. The latest funding makes Chime one of the most valuable private FinTechs in the world.
Sequoia Capital Global Equities led the round, according to reports, with participation from SoftBank, General Atlantic, Tiger Global, and Dragoneer Investment Group.
The USP 🥊 Founded in 2013, Chime offers a fee-free, user-friendly banking app, which provides an accompanying debit card - on which the business earns interchange revenue - and an auto-savings account.
The COVID effect 🚀 The firm has taken advantage of the rise in digital banking during the pandemic, with its latest valuation $10 billion higher than in September.
More importantly, Chime became profitable on an EBITDA basis during the pandemic, co-founder and CEO Chris Britt told CNBC last September. The company is adding hundreds of thousands of accounts a month, he said at the time but declined to say how many users it has overall.
✈️ THE TAKEAWAY
EBITDA profitable is better than nothing… 🤷♂️ Not going into the details, it seems that Chime is among the very few neobanks that have managed to get closer to the real game of finance - turning a profit. Having that in mind, as well as considering its pretty strong growth, it’s not surprising at all that Chime is said to be investigating an IPO in the first half of next year. And this might be one of the best times to do that. Not only investors are still hungry for tech stocks. Also, it will be very interesting to see how one of the leading neobanks in the US will perform as a publicly traded company. Would you buy Chime’s stock? 🤔
Young consumers demand BNPL! 🗣
New data 📊 Fresh data points gleaned from an Afterpay/PYMNTS study, and from responses from more than 300 company owners reveal some interesting takeaways.
For a vast majority of businesses surveyed, where a majority of them have top lines of between $250,000 to $2.5 million — more than 95% do not offer BNPL options. Part of that disconnect, the study found, might stem from misconceptions about BNPL in general, and perhaps some more education and outreach to those merchants must be on the horizon to broaden its embrace.
Customers are getting younger though 👶 Nearly 38% of the studied firms have said that the average age of their customers has been decreasing; thus, 15% are more likely to want to use installment credit.
The shift 👉 Nearly 61% of the merchants surveyed said they agree or strongly agree that BNPL allows for sales that might not otherwise occur. And 61% of respondents, overall, said that consumers will be willing to switch to companies that offer BNPL. In fact, 57.2% of business owners state (agreeing or strongly agreeing) that an increasing percentage of sales will take place via BNPL options.
✈️ THE TAKEAWAY
The disconnect 🤷♂️ There’s a huge disconnect in what consumers want and what merchants offer. Especially when it comes to the new age of e-commerce. The above data pretty well illustrates why Buy Now, Pay Later is one of the hottest verticals in FinTech right now. More importantly, it shows the consumer-driven demand that the merchants have to follow in order to stay relevant. On a general level, and for me, it’s yet another illustration that BNPL is more a feature - not a standalone product.
Walmart’s crypto hiring 😲
Looking for a lead 🔎 Walmart, the largest U.S. retailer by total sales, is looking to hire a digital currency and cryptocurrency product lead.
According to the retailer's careers page, the new role seeks to provide leadership with ways to identify technology and customer trends.
Digital currency strategy 👀 Investments needed to build on those existing trends will also be advised by the Bentonville, Ark.-based crypto product lead, as reported by CoinDesk.
Part of the role's remit includes driving the retail giant's digital currency strategy. Identifying crypto-related partnerships and investments will also be part of the role.
Not the first crypto attempts 🔙 Two years ago, Walmart applied for a patent on price-stable crypto similar to Facebook’s nascent project, then called Libra.
Walmart has also experimented with distributed ledger technology for nonfinancial uses such as tracking drugs and food along the supply chain. Earlier this year, Walmart created a FinTech unit called Hazel. The move signaled the big-box retailer has not lost its appetite for a piece of the consumer finance pie since its unsuccessful attempt to get a U.S. bank charter in the early 2000s.
✈️ THE TAKEAWAY
Walmart is a FinTech. As I’ve written earlier, Walmart is also playing the FinTech game, and it has some serious advantages. With over 10,000 stores and over 250 million customers visiting Walmart every week, it has a serious alternative to bank branches and vast amounts of customer data that could be leveraged to offer banking products. Not to mention easy distribution and marketing capabilities. Hence, given the recent surge in population and adoption of cryptocurrencies, it’s obvious that Walmart wants to be on top. Think about the Walmart Coin…
🔎 What else I’m watching
Paying with your palm? Not so fast 👋 Three U.S. senators — two Democrats and a Republican — have asked Amazon to provide details about privacy and security protections for its new Amazon One palm print-recognition system. Amazon One lets customers use their palms to verify their identifies while making purchases at brick-and-mortar retail locations, including Whole Foods and Amazon retail stores.
Consumer sentiment is down 📉 A leading measure of U.S. consumer sentiment is at a 10-year low, the University of Michigan, which assembles the data, reported in a preliminary release. The August index was 70.2, down 11 points from the July figure and the lowest number since the number hit 69.9 in December 2011.
Voice payments 🗣 Recent PYMNTS research found that, across nearly 3,000 consumers, more than 41% would be more likely to do business with a company that would let them use voice commands to manage money or payments.
💸 Following the Money
The leading crypto staking firm Figment raises $50M in Series B funding round.
Australia-based Bendigo and Adelaide Bank has struck a deal to acquire FinTech firm Ferocia for AUD 116M to further bolster the bank's digital strategy.
Uala, an Argentina-based FinTech, has announced an investment round of $350M in the company which was led by Tencent Holdings and SoftBank Group’s Latin America-focused fund. This latest round of investments has taken the valuation of the company to $2.45B as it prepares to expand into Mexico and other parts of Latin America.
👋 That’s it for today! Thank you for reading and have a productive Tuesday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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