AI + Finance: JPMorgan's AI Chatbot can do the work of a research analyst 😳🤖; Credit card debt is soaring 📈💳; Ether ETFs’ first week shows mixed start 👀💸

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:

1. The Startup Growth Toolkit: Top 5 Resources to Scale Your Business to New Heights 🚀 [unlock the secrets to startup success with these essential resources]

2. Top resources for building and scaling billion-dollar startups 🦄 [600+ pages of knowledge and advice to launch & scale your next unicorn in 2024]

3. FinTech giant PayPal's Q2: profitability push pays off, yet all eyes are on growth challenges 👀💸 [breaking down the key numbers, what they mean & whether PayPal stock is worth your time and money in 2024 + more bonus dives into PayPal and Shopify]

4. Mastercard’s Q2 yet again proves the payments powerhouse is poised for continued growth 🚀 [breaking down the key numbers, what they mean & what’s next for Mastercard in 2024 + a bonus deep dive into its biggest competitor Visa]

5. Coinbase’s solid Q2 earnings might get derailed by regulatory headwinds & market volatility 👀📊 [breaking down the key numbers, what they mean, & whether Coinbase is worth your time and money in 2024 + lots of bonus dives inside]

6. SoFi's Q2 2024: growth, profitability, and questionable valuation 📈🤷‍♂️ [taking a deep dive into their latest Q2 2024 financials to see what they mean & whether SoFi is worth your time and money in 2024]

7. Block's Q2 2024 is Tale of Two Ecosystems: Cash App supremacy masks Square stagnation 😳📱 [what the tale of two ecosystems is all about & what’s next for Block + some bonus deep dives]

8. LendingClub in Q2: digital pivot shows promise 👏🤑 [analyzing Q2 2024 financials & what story do they tell us]

9. Remitly’s Q2 2024: digital disruptor in remittances showing promise, but valuation remains questionable 👀 [key numbers, what story they tell us & whether Remitly is worth your time and money in 2024 + a bonus dive into FinTech giant Wise]

10. Once Lithuanian FinTech star, Kevin now is close to going bust 🤕💰 [what’s happening & why it matters]

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As for today, here are the 3 fascinating FinTech stories that were changing the world of financial technology as we know it. This is one of the most intense and thrilling weeks this year so far, so make sure to check all the above stories.

AI is disrupting Finance: JPMorgan launched its own AI Chatbot that can do the work of a research analyst 😳🤖

The news 🗞️ JPMorgan Chase JPM 0.00%↑, one of the world's largest and most powerful banks, has taken another significant step into the artificial intelligence arena by developing and deploying its own AI-powered chatbot that can do the work of a research analyst.

Let’s take a quick look at this and see why it matters.

More on this 👉 Dubbed "LLM Suite," this tool is being rolled out to about 50,000 employees, particularly in the asset and wealth management division, to enhance productivity and streamline various tasks.

The LLM Suite is described as a "ChatGPT-like product" that can assist with writing, idea generation, problem-solving, and document summarization.

“Think of LLM Suite as a research analyst that can offer information, solutions, and advice on a topic,” the memo seen by the FT told employees.

This move thus signals the bank's commitment to integrating AI into its core operations and potentially reshaping traditional roles within the financial industry.

Unlike some of its competitors who have partnered with external AI companies, JPMorgan developed LLM Suite in-house. This approach allows the bank to maintain stricter control over sensitive financial data, adhering to regulatory requirements that prevent the use of consumer AI chatbots for work purposes.

ICYMI: AI is eating Finance: JPMorgan is getting into LLMs 😳 [what it’s all about & why it makes sense + more reads on how AI is eating finance]

✈️ THE TAKEAWAY

What’s next? 🤔 This rollout marks one of Wall Street’s largest use cases for LLMs. Earlier, another investment banking giant Morgan Stanley MS 0.00%↑ partnered with OpenAI to use AI startup’s products for its wealth management business. But when it comes to JPM, this should come as no surprise. JPMorgan has already built its own ChatGPT-based LLM to analyze Federal Reserve statements and speeches in an effort to sniff out potential trading signals. Back in May, JPM also unveiled IndexGPT, a tool designed to revolutionize thematic investing. IndexGPT leverages OpenAI's advanced GPT-4 language model to generate investment baskets based on emerging trends and themes. On top of that, JPMorgan Chase CEO Jamie Dimon earlier revealed that the bank has more than 300 AI use cases in production. Therefore, it’s clear that the banking giant is super serious about the future and Dimon is walking the walk - JPM now employs more than 2,000 data scientists and machine learning engineers to help build out its AI capabilities 😳

“AI is going to change every job. It may eliminate some jobs. Some of it may create additional jobs. But you can’t envision one app, one database, or one job where it’s not going to help, aid or abet” - Jamie Dimon

The future of finance will never be the same. AI + Finance = 🚀

ICYMI: JPMorgan’s Q2 2024: a financial fortress poised for growth despite headwinds 😤🏦 [unpacking the most important numbers that show a financial fortress poised for growth despite headwinds + lots of bonus reads & deep dives inside]

Credit card debt soars, but delinquency trends show mixed signals 📈💳

Following the numbers 📊 In the first quarter of 2024, the credit card landscape in the United States presented a complex picture of consumer financial health.

Let’s take a quick look at this and see what it means.

More on this 👉 Total credit card balances reached $881.23 billion, marking a 10% increase from the previous year, per data from the Federal Reserve. However, this growth in debt was concentrated among fewer consumers, as new account openings only rose by 1% during the same period.

Delinquency rates showed some improvement, with the share of accounts 30+ days past due decreasing from 1.90% in Q4 2023 to 1.79% in Q1 2024. The 90-day delinquency rate also saw a slight moderation. Despite these positive trends, both rates remain higher than pre-pandemic levels, indicating ongoing financial stress for many consumers.

A concerning development is the concentration of risk among already struggling borrowers. While fewer accounts overall were delinquent, the share of balances that were past due increased. This suggests that consumers who are behind on payments are falling deeper into debt. The share of credit card balances 30+ days delinquent reached a 12-year high at 3.56%, while those 90+ days past due rose to 1.86%.

The Federal Reserve's high interest rates have contributed to this buildup of balances and delinquencies. Although rate cuts are expected by September, their impact on consumer finances may take time to materialize.

✈️ THE TAKEAWAY

What’s next? 🤔 Looking ahead, credit card providers may need to develop more robust programs to assist delinquent customers and explore alternative revenue streams to offset slowing account growth. For FinTech startups, this situation presents both challenges and opportunities. There may be increased demand for innovative financial products that help consumers manage debt more effectively or provide alternatives to traditional credit cards. We might see the rise of AI-driven personalized financial planning tools, blockchain-based credit systems, or peer-to-peer lending platforms tailored for debt consolidation. Moreover, the concentration of risk among fewer consumers could lead to more sophisticated credit scoring models that go beyond traditional metrics. That said, FinTech companies could leverage alternative data sources and machine learning algorithms to better assess creditworthiness and offer more tailored financial products.

Ethereum ETFs’ first week shows mixed start amid high hopes for crypto's future 👀💸

Following the money 💸 The recent launch of spot Ethereum ETFs in the United States has stirred significant interest in the cryptocurrency market.

In their first week of trading, these new financial products demonstrated both promise and challenges, offering insights into the evolving landscape of digital asset investing.

Let’s take a quick look at this.

More on this 👉 Eight new Ethereum ETFs hit the market, collectively attracting over $1 billion in net inflows. Leading the pack was BlackRock's ETHA with $442 million, followed by Bitwise's ETHW and Fidelity's FETH. This initial enthusiasm clearly suggests a strong appetite for Ethereum exposure through traditional financial channels.

However, the picture gets complicated by Grayscale's converted ETHE fund, which experienced substantial outflows of $1.5 billion. This resulted in a net outflow of $341.8 million for all U.S. spot Ethereum ETFs combined. That said, the contrast between new entrants and the converted fund yet again highlights the complex dynamics at play in the market.

Comparatively, the Ethereum ETFs' performance in their first four days was notable, generating about 40% of the net inflows seen by Bitcoin ETFs during their launch in January, when excluding converted funds. This thus suggests a robust demand for Ethereum products, even if not quite matching the fervor surrounding Bitcoin ETFs.

Trading volumes for the new Ethereum ETFs reached $4.05 billion in their first week, representing 34% of what Bitcoin ETFs achieved in a similar timeframe. Notably, these products quickly dominated the Ethereum ETF market, capturing a 99.3% share of trading volume compared to existing futures-based products.

✈️ THE TAKEAWAY

What’s next? 🤔 First and foremost, the launch of spot Ethereum ETFs marks another significant milestone in the integration of cryptocurrencies into mainstream finance. Looking ahead, we may see a period of adjustment as the market digests these new investment vehicles. The performance of Ethereum ETFs in the coming months will thus be crucial in determining their long-term viability and impact on the crypto market. Additionally, this development may prompt regulators to take a closer look at other cryptocurrencies, potentially leading to a wave of new crypto-based ETFs and financial products. That said, as the lines between traditional finance and cryptocurrencies continue to blur, the launch of Ethereum ETFs represents a significant step towards mainstream acceptance of digital assets. We’re just getting started.

🔎 What else I’m watching

• Flipkart Launches Unified Payment Interface 'Flipkart Pay' 🛍️💳 India-based e-commerce company Flipkart has merged all its payment and FinTech offerings under a single vertical, Flipkart Pay, to enable seamless payments for customers. The move aims to provide a seamless payment experience as the company gears up for the festive season. Flipkart Pay consolidates the company's FinTech offerings on its app to enhance customer engagement and drive a seamless payment experience for shoppers. The company believes this will allow customers to have a better experience right from the touchpoint, making it a one-stop destination for Flipkart's affordability and accessibility constructs. Flipkart Pay signifies a new vision for its payments and fintech products, aiming to improve online shopping by making transactions easier, faster, and more secure.

• Finance Startup Kevin EU Files for Bankruptcy 🏦📉 On July 22, the Vilnius District Court received a statement from the Serbian company "AV Holding doo" and several individuals requesting the financial technology startup "Kevin EU" to file for bankruptcy, as reported by 15 min. The issue will be considered in the Vilnius District Court on September 19. Tadas Tamošiūnas, the head of Kevin EU, stated on Thursday morning that he had not heard about the lawsuit and did not know why AV Holding doo might want to initiate bankruptcy for the company. Gintaras Adomonis, the head of Valnetas, the company appointed to oversee Kevin EU's activities by the Bank of Lithuania (LB), initially said he knew nothing about the lawsuit but later confirmed receiving information about the claim. Valnetas was appointed as the temporary representative of Kevin EU last week following threats to the company's safe and reliable operation and the interests of its users. The Bank of Lithuania previously announced that Kevin EU is almost four months late in submitting its audited annual financial statements, has postponed deadlines multiple times, and does not comply with equity capital adequacy requirements or ensure adequate internal control. Kevin EU has until August 30, 2024, to submit the audited 2023 annual reports and related documents to the supervisory authority. Additionally, Kevin EU has been instructed not to provide payment services to new customers until it meets capital adequacy requirements. ICYMI: Once Lithuanian FinTech star, Kevin now is close to going bust 🤕💰 [what’s happening & why it matters]

💸 Following the Money

• Financial services institution Renasant Corporation has announced the acquisition of The First Bancshares across a five-year community benefit plan.

• Egypt-based B2B platform digitalizing the region’s traditional trade market Cartona has secured $8.1M in a Series A extension funding round. 

• Slovenia-based BNPL and POS lending platform Leanpay has raised EUR 10M in Series B funding led by BlackPeak and Catalyst Romania.

👋 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: