This Week in Fintech UK & Europe (20/09)

Welcome back TWIF UK & Europe friends,

After a week hiatus, there is lots to cover this week so letโ€™s get into it!


Editorโ€™s Note: If youโ€™re an early-stage startup founder raising equity or debt, I may be able to help - reach out to michael@thisweekinfintech.com.


Tweet of the week ๐Ÿฆ‰๐Ÿ†


Funding ๐Ÿ’ธ

There were 30 deals in the fintech space across the UK and Europe since the last post, with a total investment of $790m. Some highlights are below.

๐Ÿ‡ช๐Ÿ‡บ Aiia has agreed to be acquired by Mastercard.

๐Ÿ‡ช๐Ÿ‡บ Scalapay raised a $155m Series A led by Tiger Global and included Baleen Capital and Woodson Capital.

๐Ÿ‡ช๐Ÿ‡บ Billogram raised $45m from Partech.

๐Ÿ‡ช๐Ÿ‡บ Peaks raised โ‚ฌ5m from Haerlem Capital and Rithmesster.

๐Ÿ‡ช๐Ÿ‡บ Tomorrow raised โ‚ฌ14m from Abacon Capital, Torben Schreiter and others.

๐Ÿ‡ฌ๐Ÿ‡ง Koyo raised a $50m Series A led by Force Over Mass Capital and included Forward Partners, Frontline Ventures and Seedcamp.

๐Ÿ‡ฌ๐Ÿ‡ง Integrated Finance raised a ยฃ2m seed round led by Octopus Ventures and included 500 Startups, Super Seed, Chris Adelsbach and others.

๐Ÿ‡ฌ๐Ÿ‡ง ex-Wise employees investment platform Lightyear raised another $8.5m led by Mosaic Ventures, Metaplanet and Taavet+Sten.

๐Ÿ‡ฌ๐Ÿ‡ง Fluency raised a $1.3m seed round at a $23.5m valuation.

๐Ÿ‡ฌ๐Ÿ‡ง Marshmallow raised a $85m Series B from Passion Capital, Investec and Scor.

๐Ÿ‡ฌ๐Ÿ‡ง Regtech PassFort raised a $16.2m Series A led by Level Equity and included Episode 1, Entrepreneur First and OpenOcean.

๐Ÿ‡ฌ๐Ÿ‡ง Form3 raised a $160m Series C led by Goldman Sachs and included Nationwide, Barclays, Lloyds, Mastercard, Draper Esprit and 83North.

๐Ÿ‡ฌ๐Ÿ‡งCoinfirm raised a $8m Series A co-led by Avaloq Ventures and SIX Fintech Ventures with participation from MiddleGame, CoinShares and Mission Gate.

๐ŸŒ Varo Bank raised $510m at a $2.5bn valuation from Lone Pine, Berkshire Partners, Declaration Partners, Eldridge and Marshall Wace.

๐ŸŒ QED raised over $1bn for two new fintech funds.

Challenger Banking ๐Ÿš€

๐Ÿ‡ช๐Ÿ‡บ Tinkoff added Spotify to its app, giving users a discount and 25% cashback as it looks to build out into a superapp.

๐Ÿ‡ฌ๐Ÿ‡ง British fintechs Revolut, Curve and Monzo piled into the hot BNPL space recently with their own offerings. The latter two both calling them โ€œFlexโ€. As if fintech naming needed more confusion.

๐Ÿ‡ฌ๐Ÿ‡ง Starling Bank, Klarna and PrimaryBid are offering 6m returnship placements through a program created by Women Returners and Innovate Finance, looking to help people rejoin the workforce after taking time out to look after children, relatives, personal health issues or other reasons.

Digital Assets โ‚ฟ

๐Ÿ‡ช๐Ÿ‡บ Non-profit IOTA has been selected by the EU to develop its European Blockchain Services Infrastructure (ESBI), a blockchain based cross-border service for public administrations and their ecosystems,

๐Ÿ‡ช๐Ÿ‡บ A hard stance taken by ECB banker Weidmann for commercial banks regarding CBDCs.

๐Ÿ‡ฌ๐Ÿ‡ง Two ex-Ripple execโ€™s have launched pingNpay, a global micropayment network based on blockchain technology, initially rolling out in the UK.

๐Ÿ‡ฌ๐Ÿ‡ง Mastercard is offering customers the chance to win an NFT created in partnership with football manager Jose Mourinho.

๐ŸŒ The SEC appears to be coming after crypto companies with the news that itโ€™s probing into Uniswap, Coinbase and other DeFi platforms. It also intends to sue Coinbase over its โ€œLendโ€ product with Bloombergโ€™s Matt Levine having a great take. SEC Chairman Gensler was grilled by the Senate Banking Committee this week.

  • ๐Ÿ™Œ๐Ÿป TWIF Take - Clashes between regulators and the crypto community are bound to increase in the future but its a no-win situation for both sides. Regulators would be better off working with the major players in the space to clarify boundaries and provide some more insight (as Brian Armstrong is asking for). Crypto firms will benefit from less regulatory overhang and by working with regulators will better understand what they can and cannot do. It seems pretty clear from a 1946 Supreme Court case that Coinbaseโ€™s Lend product is a security and it should have realised that, whether they agree with it or not. There is still a gulf between the two parties and it doesnโ€™t look like that is changing any time soon. Coinbase has previously taken the approach of doing things by the books (unlike Binance) but now seems to be hardening its anti-regulatory stance. A unified crypto community response and outreach should follow and some pro-active voluntary steps as suggested by Simon Taylor, but will it?

๐ŸŒ A number of blockchain issues and hacks occurred recently. Solana experienced โ€œintermittent instabilityโ€ while there was an unsuccessful hack attempt of Ethereum.

Traditional Banking ๐Ÿฆ

๐Ÿ‡ช๐Ÿ‡บ AIB is focusing on financial literacy for 12-18 year olds with its new Future Sparks program.

๐Ÿ‡ช๐Ÿ‡บ ABN Amro is expanding its partnership with Subaio, a โ€œdeath techโ€ company that provides subscription management services to a deceasedโ€™s family.

๐Ÿ‡ฌ๐Ÿ‡ง JP Morgan is set to launch its new UK digital bank next week.

Fintech Infrastructure ๐Ÿšง

๐Ÿ‡ช๐Ÿ‡บ Solarisbank reported a loss of โ‚ฌ28m for 2020 (up from โ‚ฌ23m in 2019) as well as a large an increase in income from โ‚ฌ8.2m to โ‚ฌ26.2m. Rough estimates put its revenue at โ‚ฌ27 per account.

๐Ÿ‡ช๐Ÿ‡บ NexPay is to use Saltedge to run its SCA and authentication process.

๐Ÿ‡ช๐Ÿ‡บ Bunq partnered with Paysafe to allow its digital bank customers to make cash deposits.

๐Ÿ‡ฌ๐Ÿ‡ง The Pensions Dashboards Programme (PDP) selected Capgemini for the delivery of its new technical architecture designed to give consumers access to their pension information online in one place.

๐Ÿ‡ฌ๐Ÿ‡ง Ecommpayโ€™s whitepaper finds awareness and understanding of open banking is still not widespread. 28% of consumers had โ€œno ideaโ€ what Open Banking is.

๐Ÿ‡ฌ๐Ÿ‡ง Yolt is shutting its consumer facing app to focus on its B2B open banking platform.

๐Ÿ‡ฌ๐Ÿ‡ง Gr4vy has integrated Banked and GoCardless as payment options for their checkout product.

๐Ÿ‡ฌ๐Ÿ‡ง TrueLayer launched PayOuts, combining Open Banking verification and faster payments to speed up refunds and withdrawals to consumers. It also teamed up with Cazoo to launch

๐Ÿ‡ฌ๐Ÿ‡ง Thought Machine signs a deal with Arvest, a US community bank for its Vault core banking solution.

๐Ÿ‡ฌ๐Ÿ‡ง The first variable recurring payments hackathon launched which is hosted by Open Future World, Ozone and UK Finance.

๐Ÿ‡ฌ๐Ÿ‡ง BoE officials look set to be cracking down on tech companies that provide cloud banking infrastructure to UK banks to ensure resiliency.

Payments ๐Ÿ’ฐ

๐Ÿ‡ช๐Ÿ‡บ 75% of cashless transactions in Dach region (Germany, Austria and Switzerland) are now contactless, almost doubling from 40% pre-pandemic.

๐Ÿ‡ฌ๐Ÿ‡ง PayPal is increasing its transaction fees between the UK and Europe to 1.29% from 0.5%. This is a similar move post-Brexit as what Visa and Mastercard plan.

  • ๐Ÿ™Œ๐Ÿป TWIF Take -It will be interesting to see if the UK adopts rules to keep interchange at its current 0.2%-0.3% which is the same across Europe.

๐Ÿ‡ฌ๐Ÿ‡ง A survey by consumer watchdog Which? found that 1 in 5 UK consumers have been blocked from paying with cash since the lockdown was eased between April and July, with 16% of those unable to pay for an item.

  • ๐Ÿ™Œ๐Ÿป TWIF Take -Whilst many readers will not think this is a problem, there are many consumers who are unable, for a variety of reasons, use cards or cash and so access to cash payments is important to maintain financial inclusion and the UK government has committed to keeping and enforcing cash acceptance as a payment method.

๐ŸŒ PayPal buys Japanese BNPL company Paidy for $2.7bn.

๐ŸŒ Amazon is working on a POS to challenge PayPal and Shopify and power third party retailers with online and offline with processing and data analytics.

๐ŸŒ Square sellers can now accept payments through Cash App Pay, something that has been alluded to and seen in the wild but now is official. Although QR based, the creation of its own closed loop network is super interesting.

๐ŸŒ Reserve Bank of India (RBI) and Monetary Authority of Singapore (MAS) are to link their domestic faster payment systems together giving uses an instant, low cost transfer service between the two systems without needing to be onboarded to the other system.

  • ๐Ÿ™Œ๐Ÿป TWIF Take - A global system of interlinked domestic faster payments systems could make some of the benefits of a CBDC disappear and it will be interesting to see this linking spread more globally.

Regulatory Corner ๐Ÿ”Ž

๐Ÿ‡ฌ๐Ÿ‡ง Citizens Advice found that 1 in 10 BNPL shoppers are being chased by debt collectors.

๐Ÿ‡ฌ๐Ÿ‡ง Sifted reports on the slow approval of applications for bank licences at the FCA.

๐Ÿ‡ฌ๐Ÿ‡ง UK Finance found the number of impersonation scams doubled in H1 2021 to 33,115.

๐Ÿ‡ฌ๐Ÿ‡ง Changes could be coming to consumers rescue with regards to APP fraud from the Payment System Regulator (PSR) on improving consumer protections. Data shows 75% of customers do not get reimbursements but after complaints to the FOS, 73% are reversed in the consumers favour.

๐Ÿ‡ฌ๐Ÿ‡ง The BoE has criticised some banks for failing to accurately provide data to help regulators identify risks in the financial system.


๐ŸŒ International

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Michael

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