Banks spend more to fight FinTechs 💸; ARK Invest votes for Square 🗳; Robinhood, but from Nigeria🇳🇬
Good Morning FinTech. 4/30
Banks trying to catch FinTechs…
Good morning Everyone,
Bitcoin is trading below $30,000 at the point of writing. We haven’t seen that since December last year… Likewise, we haven’t seen these 3 great stories👇🏼
Banks spend more to fight FinTechs💸
FinTech competition is real 👀 Virtually all the banks are forecasting higher expenses and lower revenues while facing continued slowdown in lending and increasing pressure from FinTechs. Finally, right? 🤷♂️
US banks aren’t sleeping well at night 🏦 The biggest banks in the US forecasted an increase in expenses totalling over $6.6B in the latest quarter. This is due to investments in tech, keeping employees happy, and attracting new talent & customers. Thank you, FinTech… 👀
Here’s one shocker 🤯 The 5 banks posted a 21% increase in costs in the second quarter this year over pre-pandemic 2019, with only a 10% increase in earnings. And we say FinTechs are struggling with revenues…
Banks are playing an increasingly smaller role in the financial system (JPMorgan’s Jamie Dimon in an annual letter to shareholders)
✈️ THE TAKEAWAY
FinTechs are eating banks’ lunch? 🤔 Well, it’s not that straightforward… While competition from FinTechs is definitely there, we must remember that we’re still living in a pandemic world - people aren’t travelling freely in most of the world (and increasing number of countries are thinking of getting back to quarantine regime), spending has become much more cautions, etc. Hence, this is undoubtably one of the reasons that has made an impact to the bank numbers. On the other hand, you might think that Revolut’s $33B valuation isn’t that insane after all… 🤷♂️
ARK Invest votes for Square 🗳
She loved the song 🎶 ARK Investment Management increased its holdings of payments services firm Square after its founder, Jack Dorsey, announced on Friday the company is creating an “open developer platform.”
No brainer 🧠 Square's growing intentions to build out crypto products (including a Bitcoin hardware wallet, as well as DeFi ambitions), align with ARK ambitions to realize its exchange-traded fund. Which everyone is waiting for…
2 buys 💸 The ARKK fund, which typically invests in tech improvements, bought a total of 179,664 shares while ARKW, typically focused on internet tech, made a further purchase of 46,273 shares. Not too bad!
✈️ THE TAKEAWAY
A vote of confidence 🗳 Given Cathie Wood’s bullishness towards crypto (Bitcoin in particular), the move is pretty obvious. On the other hand, and in the case of Square - it’s a vote of confidence that the payments technology firm can deliver and be at the forefront of cryptocurrency adoption. The stock is down after the announcement though… 🤷♂️ (the Wall Street might not be convinced as of yet)
Robinhood, but from Nigeria🇳🇬
Following the steps 👣 Nigeria based Chaka, a platform offering local and foreign stocks to individuals, has just closed its $1.5M pre-seed round to power digital investments for individuals and businesses.
One can remember that when Robinhood raised its $3M seed round back in 2013, it was a couple of months old. Now it has grown to serve more than 30M users with its zero-commission trading, and its IPO is just arround the corner.
The 🇺🇸-🇳🇬 connection. According to the founders, Chaka wanted to create opportunities for Nigerians to invest in dollar assets and at the same time allow foreigners to invest in Nigerian assets. The expectation is that Nigerian market will grow and attarct more interest.
Access & compliance ✅ Chaka already gives Nigerians access to more than 10,000 stocks and ETFs trading on local and foreign capital markets. More importantly, Chaka’s local assets are registered with the Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS) and regulated by the Securities Exchange Commission of Nigeria (SEC). Dollar assets, on the other hand, are regulated by the U.S. FINRA and the U.S. SEC. And that’s a very strong move in a regulatory-intensive environment.
Different model 👉 Unlike platforms like Robinhood, which offers online brokerages, Nigerian investment platforms do not. Chaka, for instance, partners with Citi Investment Capital in Nigeria and DriveWealth LLC in the U.S. to issue stocks and securities.
✈️ THE TAKEAWAY
Africa is huge. Actually, it’s the next BIG Thing, and I have said it multiple times… Nigeria alone has over 200M population, which is tech-savvy and increasingly interested in preserving their wealth. With the regulation-first approach, Chaka potentially could become the next Robinhood, just for Africa. I’ll follow them more closely from now 👀
🔎 What else I’m watching
Apple Pay Later - a threat for cards? 🤔 Karen Webster argues that Apple Pay Later could pose a larger threat to card issuers (think banks) than to BNPL players (think Klarna, Affirm, and the likes).
$35B 👀 Stock trading giant Robinhood is seeking to raise up to $2.3B at a valuation of as much as $35B in its upcoming IPO. In an SEC filing, the firm says it will look to sell around 55M shares for between $38 and $42 apiece. It will list on the Nasdaq under the ticker symbol $HOOD.
BoA goes BTC🔥 Bank of America, the second-largest bank in the US by total assets, last week approved trading of bitcoin futures for some clients, according to people familiar with the matter.
Bitcoin gets easier 🙌🏼 Bitcoin’s mining difficulty, a metric indicating the effort required to solve the complex cryptographic puzzle to mine blocks and validate transactions, recorded its 4th straight drop over the weekend.
El Salvador is all-in on crypto🇸🇻 El Salvador’s government has plans to launch a native cryptocurrency that consumers will be able to use for services, according to Latin American newspaper El Faro. Long live crypto in LatAm? 🤔
💸 Following the Money
India-based full-stack financial solutions company Razorpay has acquired TERA Finlabs, an AI-based risk tech SaaS Platform. The terms of the deal weren’t disclosed.
Lightico, a startup that helps firms - including banks - collect forms, signatures, documents, and payments from customers digitally, has raised $15M in a follow-on Series B round led by Capital One Ventures.
Credit Suisse has led a $20M Series A financing round in Daloopa, a provider of AI-powered data extraction services to hedge funds, investment banks, and other financial institutions.
👋 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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