Visa officially acquires Brazilian FinTech Pismo for $1 billion 💸; 𝕏 gears up to offer payments and banking services 📲; Klarna to replace workers with AI to drive profits 🤖
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 KPI Dashboard Templates for All Your Needs 📊 [use this to elevate your decision-making]
Amazon Drops Venmo 😲 [why it made sense & what happened + what’s next & some deeper dives]
Nubank & Circle partner up to unlock stablecoin potential in Brazil 🇧🇷
DaveGPT empowers 10M members with personalized AI Assistance 🤖🐻
Apple offers to let rivals access its NFC tech in EU antitrust case📱
As for today, here are the 3 captivating FinTech stories that were transforming the world of finance as we know it. This week was very intense in the financial technology space, so make sure to check all the above stories.
Visa officially acquires Brazilian FinTech Pismo for $1 billion 💸
The news 🗞️ Visa V 0.00%↑ just made a major play in the booming Latin American FinTech market by acquiring Brazilian payments startup Pismo for $1 billion.
The deal, which was recently greenlit by Brazil's antitrust regulator CADE, represents Visa's largest-ever investment in the region.
Let’s take a look.
More on this 👉 We can remember that Pismo provides cloud-based financial services infrastructure that enables over 70 million accounts and processes $200 billion in transactions annually.
The acquisition thus gives Visa the capability to offer bank-grade payments processing and card issuance solutions to clients via APIs. Visa also gains support for local payment methods like Brazil's Pix real-time system.
For Pismo, being scooped up by the payments giant opens immense possibilities to scale its innovative offerings across Latin America under Visa's vast network.
The startup scene in Brazil is particularly vibrant - representing 31% of regional FinTech.
✈️ THE TAKEAWAY
Looking ahead 👀 In short, this blockbuster purchase signals Visa's strategy to tap into surging digital finance adoption in emerging markets. With strong synergies in their operations, Visa can leverage Pismo's tech to provide next-gen banking and payments experiences as consumer behaviors rapidly evolve. But there’s more to that…
ICYMI: Prospering amid economic weakness: Visa acquires Brazil's Pismo in one of the largest FinTech M&A deals in LatAm 🤝💰 [a closer look at this deal to see how it perfectly fits into the credit card giant’s long-term strategy & uncovering why Visa is a strong long-term investment (based on DCF analysis, P/E ratios, & macro factors)]
+ you will also unlock 4 Essential M&A Templates to Master the Art of Dealmaking.
𝕏 gears up to offer payments and banking services 📲
The news 🗞️ Money never sleeps. So does Elon Musk whose grand vision for X is coming closer to reality as the platform secures more money transmitter licenses across US states. During the same week.
With the latest approval from Pennsylvania, X now has the green light to facilitate money transfers in 13 states so far. Solid work 👏
Let’s take a look at this.
More on this 👉 This basically lays the foundation for X to introduce peer-to-peer payment capabilities soon, allowing users to send money to each other within the app.
The move essentially replicates services offered by the likes of PayPal PYPL 0.00%↑ and Venmo, positioning X as a major competitor in the digital payments arena.
If you’re closely following the space (or actively reading my newsletter 😎), you know that Musk has been vocal about morphing X into an "everything app" akin to China's WeChat, where users can conduct ride-hailing, merchant payments, and even access banking services.
He now expects the rollout of new financial features by the end of 2024.
✈️ THE TAKEAWAY
Looking ahead 👀 We must note that the licensing efforts began before Musk acquired Twitter, starting with less stringent states. Obviously, X still faces significant trust issues around Musk himself that could impact its payments push. Nonetheless, payments and banking could hugely diversify X's revenues beyond just advertising, especially given the recent advertiser exodus. If X can gain enough regulatory approvals and public trust, it could fundamentally transform into a one-stop shop for messaging, transactions, and daily financial needs — the fruit of Musk's ambitious vision. X may soon be much more than a social network.
ICYMI: Elon Musk’s 𝕏 receives more money transmitter licenses 🏦 [why it matters & what’s next + a deeper dive into how Musk wants to replace your bank account within 1 year]
Klarna to replace workers with AI to drive profits 🤖
The news 🗞️ FinTech giant Klarna recently instituted a hiring freeze for roles outside of engineering as part of a push towards profitability driven by artificial intelligence.
The Swedish Buy Now, Pay Later (BNPL) provider does not currently have plans for layoffs but expects staff numbers to organically shrink as people leave and are not replaced.
Let’s take a quick look at this.
More on this 👉 This hiring freeze comes on the heels of 10% staff cuts made in May 2022. Klarna has been focused on tightening lending standards, cutting costs, and diversifying revenue streams to finally achieve consistent profitability.
These efforts now appear to be paying dividends. Klarna posted its first profitable quarter since 2019 in Q3 2022, earning SEK 130 million.
ICYMI: 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]
The US market also saw its fourth consecutive quarter of gross profit growth. Klarna CEO Sebastian Siemiatkowski credits the company's AI advancements as a key driver of this performance.
✈️ THE TAKEAWAY
What’s next? 🤔 It’s clear that by relying more heavily on AI, Klarna aims to increase efficiency, continue reducing labor costs, and sustain this newfound profit trajectory. If successful, this strategy could position the company for a strong IPO in 2023. However, this focus on AI and automation presents risks as well. Klarna will need to ensure its tech delivers as promised and does not negatively impact customer experience. More importantly, maintaining growth while slashing jobs also poses challenges. Zooming out, one thing is clear - Klarna isn’t the first and definitely not the last company that’s implementing AI to drive efficiency and slash costs. A whole paradigm shift is just around the corner.
ICYMI: Ritual raises $25M to make AI decentralized 😳 [the USP & why this is very interesting]
Generative AI will make Finance Autonomous 🤖💸 [taking a big picture view on the changes taking place now & what’s next + more deeper dives into AI & Finance]
🔎 What else I’m watching
Revolut’s billions 🤑 Revolut co-founder and CEO Nik Storonsky has been ranked the second youngest billionaire in the UK behind GymShark's Ben Francis. Although the average age of billionaires globally has dropped 11 years since 2014 to 47, 39-year-old Storonsky stands out with a £2.6 billion net worth. He launched the now £26 billion valued FinTech Revolut in 2015 at age 31 alongside co-founder Vlad Yatsenko, 33. Despite downturns in fintech valuations, Revolut continues expanding internationally. Storonsky is the only pure-play fintech founder in the top ten, just behind 55-year-old Moneysupermarket.com founder Simon Nixon. Other young British billionaires in finance include hedge fund founders Alexander Gerko of XTX Markets, Christopher Rokos, and Michael Platt of BlueCrest Capital. ICYMI: Revolut to go all-in on mortgages 🏠 [what’s the rationale behind & why it makes sense + some bonus reads & deep dives on Revolut]
More AI in banks 🏦 CaixaBank has assembled a 100+ person cross-functional task force dedicated solely to deploying generative AI across internal services and customer offerings. Working alongside Microsoft and Accenture from Madrid and Barcelona offices, the team encompasses various CaixaBank departments and its tech subsidiary. The Microsoft partnership provides early access to GPT models and a secure test environment. Initial focus areas showing promise include optimizing digital customer service and enhancing risk analytics. Other explorations cover automating code/documentation generation and testing for new tech features. Multiple working groups are developing real-world use cases where generative AI can elevate employee and customer experiences. CaixaBank expects to start an organization-wide rollout in 2024. ICYMI: DaveGPT empowers 10M members with personalized AI Assistance 🤖🐻 [what’s the value add & what’s next + some bonus reads about AI + Finance, and the building blocks of AI Bank of The Future]
Coinbase spotted 👀 Cryptocurrency exchange Coinbase COIN 0.00%↑ is launching international spot markets outside the US to expand global user access. Via its Coinbase International Exchange unit, the company envisions becoming a cornerstone of the global crypto ecosystem with industry-redefining yet trustworthy capabilities. Since launching in May 2023, the exchange has onboarded over 100 institutions and delivered $10 billion in perpetual futures volume in Q3 alone. Now with the addition of international spot trading, Coinbase aims to significantly lower latency barriers and provide an enhanced trading experience worldwide. Launching in phases, BTC and ETH trading against USDC will first open via API to non-US institutions only on December 14th to establish liquidity foundations before later expanding to more assets, features, and users. As part of Coinbase’s global expansion strategy, the international exchange also offers issuers and crypto players a compliant alternative to perceived uncertainties of US platforms. ICYMI: Coinbase stock soars to 18-month high 🚀 [what’s happening + recap of their latest numbers, what’s the most important stat & why I’m bullish on them]
💸 Following the Money
GFO-X, a crypto derivatives venue regulated in the UK, announced a $30M Series B round led by M&G Investments — the $332B asset management arm of the pensions giant.
Citi C 0.00%↑ has led an investment round in Colombian B2B payments startup Supra. Far Out Ventures and H20 Capital also participated in the financing round. Founded in 2023, Supra delivers cross-border payments and treasury services for small and medium-sized businesses that participate in import and export activities.
Estonian RegTech Salv has raised €3.9M in new funding to spearhead a launch into the UK. The round includes investments from new and existing investors, bringing its capital raised this year to €7.9M and total funding to €12.1M.
👋 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:
Klarna to IPO this year?! I think you meant 2024.
Otherwise - good read as always!
Brilliant read - thanks for sharing. Bullish on Visa as never before.