Afterpay wants to be a bank 🏦; Square launches Square banking 📲; FTX's mindblowing fundraise 🤯

Good Morning FinTech. 5/30

Everyone in FinTech eventually…

Good morning Everyone,

We are in the middle of the week, and I trust you are still keeping your best game up. Here are 3 wonderful stories to make your Wednesday productive:

Afterpay wants to be a bank 🏦

BNPL first, the bank later 📲 Australian buy now pay later (BNPL) provider Afterpay is testing a new money and lifestyle app that will offer users a savings account and debit card (meh 😑). The test run is initially rolling out to the firm’s Australia staff. Public go-live is planned for October.

Delivered by a bank 🏦 The savings account and debit card solution was developed on the Westpac Bank (one of the biggest banks in Australia) infrastructure following a partnership developed in October 2020. This is the first product though.

Perks 💸 The app gives people a way to check their BNPL balance, installments, spending account, and savings. Customers can earn an interest rate of 1% p.a. on up to 15 different savings accounts, the company said. 

✈️ THE TAKEAWAY

Everyone eventually ends up as a bank… This move by Afterpay seems like following the footsteps of its rival Klarna that become a bank in Sweden in 2017 and in Germany this year. Yet, it’s very rational, especially given recent news about Apple Pay Later. If the latter becomes true, BNPL can no longer be a standalone product - it has to offer a full experience. Looks like Afterpay has an interesting, and rather niche strategy, here which is to help Gen Z and Millennials “spend, save, and play” (that is said to be the purpose of the app). Even having 14.6M clients, customer retention will be crucial here.

Square launches Square banking 📲

A bank from scratch 🙌🏼 The payments processing biz has just launched a new product called Square Banking that combines a checking account, savings accounts, debit cards, and loans. 

The love for SMEs 🖤 The purpose of Square Banking is one and only - the company wants to convince small businesses that it’s just easier to manage all their money needs through Square. It’s an all-in-one solution.

Yet, another bank is in the back… 🏦 Behind the scenes, checking accounts are currently provided by Sutton Bank, including the FDIC insurance.

✈️ THE TAKEAWAY

The Swiss army knife 🔪 Square wants to have its customers fully into their loop, controlling all the value chain. The key target here - SMEs already using Square to process payments, either in-person and/or online sales. Some of these customers definitely have a business bank account that isn’t managed by Square. With Square Banking, they could realize they don’t need them anymore. And that would be a big win for Square.

FTX's mindblowing fundraise 🤯

Another one 💸 Crypto exchange FTX has officially closed its Series B funding round, drawing in $900M from an array of investors. Participants include SoftBank (how unexpected 👀), Sequoia Capital, Paradigm, Lightspeed, among others. In total, as many as 60 investors participated in the FTX raise.

The brand 🦄 Launched in 2019, FTX has grown to become one of the most publicly visible exchanges globally, with its headline-catching sponsorship deals with the likes of Major League Baseball and e-sports team TSM, among others. The $900M in the bank gives FTX a valuation of $18B. It represents the biggest crypto investment round to date 👀

Show me the money💰Like many competitors, FTX makes money from trading fees. It has also expanded into other areas, including stocks and commodities via derivatives contracts. This month, the firm has done around $19.3 billion worth of volumes.

✈️ THE TAKEAWAY

Everyone wants to be an investor 👋 With the growing interest in brokerage services, one couldn’t imagine a better time to raise funds for companies like FTX. More importantly, Robinhood IPO is just around the corner, which will be a very good test for the Wall Street appetite towards new investment firms/apps. One of FTX’s key strengths is its customizability - whether it is a neo-bank looking to offer crypto trading or a payment portal, everything is available via API. Hence, you can focus a bit less on the brand and more on product features and competitive B2B pricing.

🔎 What else I’m watching

• Stop it right there✋ Crypto lending platform BlockFi has received an order from New Jersey’s acting attorney general to halt its interest account operations in the state, CEO Zac Prince confirmed Monday.

• Financially stretched 👀 New research from Yolt has found that 17% of adults in the UK (8.7M) are ‘financially stretched’ and a further 10% expect to still be struggling to make ends meet over the next 12 months.

• Hottest IPO🔥 As of March 31, 2021, Robinhood said in its filing with the SEC, there were 18M net cumulative funded accounts on the Robinhood platform, up 151% from last year.

💸 Following the Money

• NFT Marketplace OpenSea valued at $1.5B in a $100M funding round led by A16z.

• New York-based Capchase, a non-dilutive capital provider, closed a new $280M round of debt and equity — less than seven weeks after announcing a $125M round.

• Bill.com has signed a definitive agreement to acquire Invoice2go in a stock and cash transaction valued at approximately $625M.

• Listed Finnish alternative lender Fellow Finance has merged with Evli Bank, creating two new entities in the process. Fellow Bank to continue its banking services for SMEs and individuals as well as create new savings accounts for its customers. New Evli will become the group’s asset management arm. 

• Amsterdam Trade Bank has expanded debt funding to Creditshelf by €20M, totaling €60M since the beginning of the year.

• Next-generation eCommerce risk management platform Riskified has filed an IPO targeting a valuation in excess of $3B on the NYSE.

• InsurTech Kin is merging with the special purpose acquisition company Omnichannel Acquisition Corp. to go public on the NYSE under the ticker symbol “KI.” The combined entity will be called Kin Insurance and will be valued at an estimated $1.03B.

👋 That’s it for today! Thank you for reading and have a productive Wednesday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:

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