Apple’s uncertain future after Goldman Sachs split. Who will partner with Apple Card now? 🤔; BNPL's Best Day Ever on Cyber Monday 🤑; Revenue-based financing is heating up in the Middle East 💸
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back 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:
The Ultimate LTV/CAC Calculation Template 📈 [use this to maximize business growth]
FinTech giants seek growth through strategic M&As 📈🤝 [two interesting deals + valuable resources to turn every M&A into a success]
Adyen to boost Klarna's growth as acquiring bank 🚀 [why this is a major win for Adyen + deep dives into both Klarna & Adyen]
Coinbase launches free global crypto transfers via messaging links 📲
BlackRock bets Big on AI 🤖 [why it’s huge + more bonus reads on AI + Finance]
As for today, here are the 3 fascinating FinTech stories that were changing the world of finance as we know it. This week was very hot in the financial technology space, so make sure to check all the above stories.
Apple’s uncertain future after Goldman Sachs split. Who will partner with Apple Card now? 🤔
Following the trends 👀 After a successful 4-year run, Apple AAPL 0.00%↑ has decided to end its partnership with Goldman Sachs GS 0.00%↑ on the popular Apple Card credit card.
ICYMI: End of an era: Apple is shutting down its credit card partnership with Goldman Sachs 😳 [what happened & what’s next + some interesting bonus reads]
With over 6 million users seeing it as their primary card, this leaves many customers wondering what's next for Apple Card.
Let’s take a look at this and see who are the possible banking partners, and what’s next for Apple.
The USP 🥊 We can remember that launched in 2019, the Apple Card aimed to fuse financial services and technology through deep iPhone integration, security features like tokenization, and financial perks like 3% cash back.
However, Goldman Sachs struggled to make the card profitable, reportedly losing billions on the venture (more on that - above).
Partner search 💳 Having said that, and knowing that the Goldman deal is off, now Apple is searching for a new issuing bank to take on its lucrative but complex credit card business. According to various sources, top contenders include:
JPMorgan Chase JPM 0.00%↑: with $1.14 trillion in assets, Chase has the scale and digital infrastructure to smoothly take on Apple Card's millions of technologically-savvy users. ICYMI: Paradigm shift: JPMorgan launches Programmable Payments 💸
Citi C 0.00%↑: Citi has invested heavily in digital banking innovation and has a global presence that aligns with Apple's, making it well-equipped to preserve the Apple Card experience.
Bank of America BAC 0.00%↑: BofA's $480 billion in assets, coupled with major tech investments, give it the resources to manage Apple Card's complexity while enhancing its digital experience.
American Express AXP 0.00%↑ AmEx is renowned for stellar customer service and digital capabilities, which could help maintain superior support and the tech-driven functionality of Apple Card. ICYMI: AmEx is building a B2B payments powerhouse 🚀
Synchrony Financial SYF 0.00%↑: as the largest US store credit card issuer, Synchrony has experience managing a high volume of accounts, essential for serving Apple Card's 6+ million users.
Yet, an open question is if they can replicate Goldman's advanced tokenization technology which bolsters Apple Card's security.
More importantly, the transition also introduces uncertainty around credit limits, rewards, financing offers, and customer service - key pillars of the Apple Card experience. While Apple will likely ensure continuity in user experience, new bank policies could lead to changes.
✈️ THE TAKEAWAY
What’s next? 🤔 Long-term, the Apple Card breakup signals Apple's broader ambitions in consumer finance. We already know that the tech titan is working on its own payment and credit infrastructure to enable future products, and the breakup could push this agenda only forward. And this could eventually reduce reliance on banking partners over time. But for now, Apple Card's millions of iPhone users are left wondering if the card's magical mix of technology, security, and financial perks will change when it gets a new bank behind it. Apple and its new partner face a high bar in preserving the unique Apple Card experience.
BNPL's Best Day Ever on Cyber Monday 🤑
The news 🗞️ Buy Now, Pay Later (BNPL) service providers had their highest-grossing day ever on Cyber Monday 2023, processing a whopping $940 million in payments for online purchases.
That represents a massive 42.5% increase over 2022, according to Adobe Analytics ADBE 0.00%↑ data.
Let’s take a look at this.
More on this 👉 BNPL users are buying more per order as well, with 11% more items per BNPL order compared to last year. Clearly, consumers are relying on installment purchasing to stretch their holiday budgets amid economic uncertainty.
BNPL enables larger cart sizes while spacing out payments interest-free, which makes it an ideal choice for people looking to have some spare cash now.
Winners 🏆 Leading BNPL providers Klarna and Afterpay prepared for the holiday sales surge by enhancing their apps and features. Their foresight paid off, with Afterpay seeing a 19% year-over-year jump in Cyber Weekend transactions.
App usage alone climbed 16%. Not bad 👏
Demand drivers 📈 Consumers cite budgeting help as a top reason for choosing BNPL, along with accessing credit if they can't qualify for cards. BNPL loans sidestep high credit card interest rates.
But with BNPL's growth, providers must balance opportunities with risks. If some portion of BNPL borrowers default, providers' revenues suffer. Delinquencies may rise given 40% of Afterpay users and a third of all BNPL consumers have subprime credit scores under 620.
Still, the services democratize access to credit otherwise unavailable.
✈️ THE TAKEAWAY
What’s next? 🤔 BNPL's banner Cyber Monday bodes well for solid holiday sales contributions. But post-holiday loan performance bears monitoring to gauge any deterioration of borrower repayment patterns. If more consumers overextend themselves, 2024 may bring a BNPL debt hangover. Despite that, both Affirm AFRM 0.00%↑ and Klarna seem to be well-positioned to handle that. Still bullish.
ICYMI: Strong growth & profitability: Affirm is becoming a force to be reckoned with 📈 [strong growth & profitability is making me optimistic + some bonus dives into Affirm]
Klarna's remarkable comeback: how the FinTech giant went from valuation collapse to potential 2024 IPO 📈 [latest numbers, how we got here, and what’s next + a look at how leveraging AI Klarna is building the Google of Shopping]
Revenue-based financing is heating up in the Middle East 💸
Following the money 💸 Revenue-based financing (RBF) has been growing in popularity in recent years primarily due to increasing difficulty for startups to access traditional forms of financing (i.e. bank loans).
The Middle East is a particularly attractive market for RBF because the region has a large and growing population of young entrepreneurs, and there is a strong demand for alternative forms of financing.
One company that is capitalizing on the growth of RBF in the Middle East is Flow48. Let’s take a quick look at this.
More on this 👉 Flow48 is a UAE-based FinTech company that has recently raised $25 million in funding to provide RBF solutions to SMEs in the MENA region.
Flow48's CEO, Idriss Al Rifai, believes that the company's experience in solving "last-mile" issues in the Middle East will be beneficial in the RBF space.
The growth of RBF in the Middle East is a positive development for SMEs in the region. RBF can provide SMEs with the capital they need to grow their businesses, and it can do so without requiring them to put up any collateral. This can be a valuable source of financing for SMEs that are struggling to access traditional forms of financing.
In addition to the benefits for SMEs, the growth of RBF is also a positive development for the Middle East economy as a whole. RBF can help to stimulate economic growth by providing SMEs with the capital they need to create jobs and innovation.
✈️ THE TAKEAWAY
What’s next? 🤔 The future of RBF in the Middle East is bright. The region has a large and growing market for RBF, and there is a strong demand for alternative forms of financing. As more companies like Flow48 enter the market, RBF is expected to play an increasingly important role in the financing of SMEs in the Middle East. Watch out for this space!
🔎 What else I’m watching
The last of us 👀 Jonas Templestein, the last remaining Monzo co-founder from its 2015 founding, has departed the UK challenger bank after nearly 9 years. Templestein was the former CTO and left alongside CEO TS Anil and COO Sujata Bhatia, who he credits with saving Monzo from existential threats during the 2020 pandemic when fundraising evaporated and losses mounted. With his exit, none of the original five co-founders remain at a bank they created to disrupt British banking. Templestein reflected on overcoming past struggles and expressed confidence in Monzo's future trajectory as he closes his chapter in its early story. His absence formally ends the era of original visionaries guiding Monzo. ICYMI: Monzo is exciting again: Alphabet to invest £300-500 million in a funding round valuing the digital bank above £4 billion 🤯 [what’s the story behind & what it means + lots of bonus reads and deep dives into Monzo and beyond]
Robinhood in EU 🇪🇺 US financial services company Robinhood HOOD 0.00%↑ has launched its crypto trading app in the European Union. The custodial platform offers users a monthly Bitcoin rebate based on trading volume. New users can earn up to 1 BTC for signing up and referrals. General Manager Johann Kerbrat sees crypto as shaping the future of finance and aligning with Robinhood's mission to make finance accessible. The EU's crypto regulations also fit Robinhood's commitment to compliant crypto operations. Key benefits include Bitcoin rebates, transparency, and the ability to earn BTC. As a publicly traded US company with security measures, Robinhood Crypto is now available to eligible 18+ EU citizens on iOS and Android. ICYMI: Third time lucky? Robinhood launches in the UK 🇬🇧 [& why Google sold all its stake at Robinhood]
💸 Following the Money
UK InsurTech startup CatX has successfully raised $2.7M in seed funding as the company looks to bridge the gap between supply and demand in the reinsurance sector.
Crypto data platform Shadow secured $9M in a seed funding round led by Paradigm to expand its engineering team as it aims to simplify data handling on Ethereum.
Canadian FinTech Koho has raised an additional C$86M at a C$800M valuation in a Series D round extension. Drive Capital, Eldridge Industries, HOOPP, Portage, Round13, BDC, and TTV participated in the extension.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
Barclays?
What about Apple doing this themselves?