Klarna’s latest feature is a growth driver further solidifying its ambition to become the Google for Shopping 🛍; Nubank finally (& really) embraces crypto 💸🇧🇷; Robinhood doubles down on Web3 🚀
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👋 Hey, Linas here! Welcome to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
Elon Musk hints Twitter could become WeChat-style Super App with payments 📲
Nubank’s strongest quarter in history 🇧🇷🚀
and more!
As for today, here are the 3 FinTech stories that were making a difference this week. It undoubtedly was one of the hottest weeks this year!
Klarna’s latest feature is a growth driver that further solidifies its ambition to become the Google for Shopping 🛍
The launch 🚀 Swedish buy now, pay later giant and one of the most valuable private FinTechs in the world Klarna has launched a virtual shopping tool, allowing consumers to shop online with the help of in-store experts.
More on this 👉 We must note that the Virtual Shopping feature builds on technology from Hero, which Klarna acquired last July. The solution was already live with 300 brand partners but now extends to Klarna’s base of more than 400,000 global merchants. Customers can access Virtual Shopping on retail websites, and merchants can connect their employees to these customers via the Klarna Store app.
The USP 🥊 With the new virtual shopping tool, consumers connect with an in-store expert by clicking the Virtual Shopping icon on participating retailers’ websites. From there, they can chat, receive photos and videos, follow product recommendations, and have a two-way video chat, mimicking the experience they would receive in-store.
What does it mean? At the core, this move by Klarna is all about boosting growth and further building on a quest to become the Google for Shopping. Here’s the takeaway:
✈️ THE TAKEAWAY
Boosting (defending?) growth & Google for Shopping play 🚀 Ultimately, Klarna will use Virtual Shopping as a merchant acquisition tool and volume driver. Virtual Shopping should help merchants improve customer service and bolster their online sales, which in turn can set Klarna apart from competitors (beyond just BNPL players) and boost Klarna’s both payments volume and revenue potential. As I’ve written last week, rising interest rates are not a good sign for BNPL which is slowly transitioning to BNPN (Buy Now, Pay Now). With this launch, Klarna could not only diversify but also defend its positions in a changing environment. Finally, it’s worth zooming out and repeating this again - it’s clear that Klarna is no longer a payments (or BNPL) company only, and it’s clearly transitioning to become the Google for Shopping. This means helping people discover and now - try new products instead of just helping them buy them. Virtual shopping solidifies this even more and hence further strengthens their positions against leading marketplaces like Amazon and/or Facebook.
Nubank finally (& really) embraces crypto 💸🇧🇷
The news 🗞 Nubank, LatAm’s FinTech gem and the largest Brazilian digital bank by market value, has added the possibility for customers to buy and sell bitcoin and ether on its platform.
Also, Nu Holdings, Nubank's parent company, is allocating roughly 1% of the cash on its balance sheet to bitcoin to show its belief in the cryptocurrency.
More on this 👉 Users will be able to buy and sell crypto with Brazilian reals, but initially won't be able to withdraw or deposit crypto. The crypto trading and custody service will be provided by Paxos’ blockchain infrastructure.
We can remember that until now, Nubank allowed users to invest in crypto only through exchange-traded funds available through its investment unit, NuInvest.
✈️ THE TAKEAWAY
Following the trends 📈 Like in many developing countries, in Latin America crypto is a hot and massively growing trend too. Yet, the trading experience is still very niche (as in most developing markets) as customers either lack the information to feel confident to enter this new market or just get frustrated by complex experiences. This is what Nubank is after. With over 53 million users in Brazil, Mexico, and Colombia, not only the challenger will capitalize on the growing consumer trend and hence add an extra revenue stream. More importantly, it will further allow Nubank to solidify its leadership as the dominant finance app across Latin America. Zooming out, it’s a warning sign for other (foreign) challengers trying to enter/win the market (i.e. Revolut).
Robinhood doubles down on crypto as it launches Web3 Crypto Wallet to compete with Coinbase & Metamask 👀
The announcement 📣 Struggling retail brokerage app Robinhood is doubling down on its crypto unit as it hopes it will help to boost the business.
CEO Vlad Tenev announced the company’s plans to roll out non-custodial crypto wallets at the Permissionless DeFi conference in Florida.
The wallet 💳 The wallet will allow users to purchase and store NFTs, earn a yield on assets, and access a host of tokens not currently available on Robinhood. The new wallet will be a standalone application from Robinhood's existing stock and crypto platform and function similarly to other non-custodial wallets like the one from MetaMask or Coinbase.
A notable feature of this wallet is that Robinhood won’t charge its customers any fees for using its non-custodial wallet, including network fees for trading and swapping crypto. The company’s goal is to have the wallet available to all 22 million of its users across the globe by the end of 2022.
This move from under the $HOOD is not only a diversification play trying to boost a struggling business but also is a part of a bigger trend emerging at the intersection of CeFi & DeFi. Here’s the takeaway:
✈️ THE TAKEAWAY
Crypto for the rescue and the last piece missing to access the Web 3 space 🧩Robinhood has been actively growing its crypto ambitions since the end of Q1 this year in a bid to attract new users and hence boost declining trading volume. In the last month alone, the exchange has rolled out custodial crypto wallets to its users, listed 4 new coins including Solana & Shiba Inu, and announced it would integrate with the Bitcoin Lightning Network to enable faster, lower-fee transactions, and now the new Web3 Crypto wallet. And there’s a lot to boost as Robinhood’s net revenue dipped 43% to $299M in Q1, with crypto trading revenues falling 39% to $54M. When you zoom out, it’s clear that this move illustrates a broader trend of firms in the centralized crypto market launching products in DeFi. Coinbase, for instance, announced early this week its own service that would allow clients to tap decentralized apps via its app. Crypto.com has its own DeFi wallet too, among others. The difference with the former is that Coinbase Wallet is free to use but does pass on individual transaction fees to its users while Robinhood says it won’t charge any fees. Finally, Robinhood’s CFO says that they want to give [users] the last piece missing to access the Web 3 space. I won’t question this (for now) but it’s clear that there’s a long road ahead to challenge even MetaMask, a de facto wallet for all things DeFi that is 30M monthly active users strong.
🔎 What else I’m watching
Bitcoin at $15k?! 👀 Bitcoin might drop more than it already has and could hit $15,000, according to a report from Seeking Alpha that cited Stifel analysts Barry Bannister and Thomas Carroll. Bannister and Carroll said they have observed an environment with more stringent financial conditions, as well as a sinking money supply. The last day has seen bitcoin falling another 10% to $28,700, which is a 90% cushion from Stifel’s price target. The analysts also said bitcoin has more downsides than equities do, as equities thrive on lots of liquidity. The liquidity is drying up because the Federal Reserve is pivoting more to hawkish actions, however, with the objective of fighting off inflation.
The pattern 👀 UST wasn’t Do Kwon’s first failed stablecoin attempt, as per CoinDEsk. Do Kwon, CEO of Terraform Labs, was one of the pseudonymous co-founders behind the failed algorithmic stablecoin basis cash. Launched on the Ethereum blockchain, Basis Cash at its peak in February 2021 had a total value locked of $174M, but it never achieved its target of dollar parity, sinking below $1 in early 2021. Hyungsuk Kang, a former engineer at Terraform Labs, said Basis Cash was a side project for some of Terra’s early creators, including himself and Kwon. So it’s a trend after all. :)
💸 Following the Money
Open Banking payments platform Token.io has raised $40M in a Series C funding round.
Elucidate, a financial crime risk management platform based in Berlin has raised $8M. The company says the pandemic has sparked a dramatic increase in financial crime, which has been further exacerbated by growing instability in Eastern Europe from the Russian invasion of Ukraine.
Early-stage venture capital firm Infinity Ventures is launching its inaugural $158M fund to help fuel FinTech infrastructure, commerce enablement, and other startups that align with its model and portfolio.
👋 That’s it for today! Thank you for reading and have a relaxing weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up: