Welcome back TWIF UK & Europe friends,
After a week hiatus, there is lots to cover this week so let’s get into it!
Editor’s Note: If you’re an early-stage startup founder raising equity or debt, I may be able to help - reach out to email@example.com.
Tweet of the week 🦉🏆
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.
🇪🇺 Aiia has agreed to be acquired by Mastercard.
🇪🇺 Scalapay raised a $155m Series A led by Tiger Global and included Baleen Capital and Woodson Capital.
🇪🇺 Billogram raised $45m from Partech.
🇪🇺 Peaks raised €5m from Haerlem Capital and Rithmesster.
🇪🇺 Tomorrow raised €14m from Abacon Capital, Torben Schreiter and others.
🇬🇧 Koyo raised a $50m Series A led by Force Over Mass Capital and included Forward Partners, Frontline Ventures and Seedcamp.
🇬🇧 Integrated Finance raised a £2m seed round led by Octopus Ventures and included 500 Startups, Super Seed, Chris Adelsbach and others.
🇬🇧 ex-Wise employees investment platform Lightyear raised another $8.5m led by Mosaic Ventures, Metaplanet and Taavet+Sten.
🇬🇧 Fluency raised a $1.3m seed round at a $23.5m valuation.
🇬🇧 Marshmallow raised a $85m Series B from Passion Capital, Investec and Scor.
🇬🇧 Regtech PassFort raised a $16.2m Series A led by Level Equity and included Episode 1, Entrepreneur First and OpenOcean.
🇬🇧 Form3 raised a $160m Series C led by Goldman Sachs and included Nationwide, Barclays, Lloyds, Mastercard, Draper Esprit and 83North.
🇬🇧Coinfirm raised a $8m Series A co-led by Avaloq Ventures and SIX Fintech Ventures with participation from MiddleGame, CoinShares and Mission Gate.
🌍 Varo Bank raised $510m at a $2.5bn valuation from Lone Pine, Berkshire Partners, Declaration Partners, Eldridge and Marshall Wace.
🌍 QED raised over $1bn for two new fintech funds.
Challenger Banking 🚀
🇪🇺 Tinkoff added Spotify to its app, giving users a discount and 25% cashback as it looks to build out into a superapp.
🇬🇧 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 ₿
🇪🇺 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,
🇪🇺 A hard stance taken by ECB banker Weidmann for commercial banks regarding CBDCs.
🇬🇧 Two ex-Ripple exec’s have launched pingNpay, a global micropayment network based on blockchain technology, initially rolling out in the UK.
🇬🇧 Mastercard is offering customers the chance to win an NFT created in partnership with football manager Jose Mourinho.
🌍 The SEC appears to be coming after crypto companies with the news that it’s probing into Uniswap, Coinbase and other DeFi platforms. It also intends to sue Coinbase over its “Lend” product with Bloomberg’s Matt Levine having a great take. SEC Chairman Gensler was grilled by the Senate Banking Committee this week.
🙌🏻 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 Coinbase’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 doesn’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?
🌍 A number of blockchain issues and hacks occurred recently. Solana experienced “intermittent instability” while there was an unsuccessful hack attempt of Ethereum.
Traditional Banking 🏦
🇪🇺 AIB is focusing on financial literacy for 12-18 year olds with its new Future Sparks program.
🇪🇺 ABN Amro is expanding its partnership with Subaio, a “death tech” company that provides subscription management services to a deceased’s family.
🇬🇧 JP Morgan is set to launch its new UK digital bank next week.
Fintech Infrastructure 🚧
🇪🇺 Solarisbank reported a loss of €28m for 2020 (up from €23m in 2019) as well as a large an increase in income from €8.2m to €26.2m. Rough estimates put its revenue at €27 per account.
🇪🇺 NexPay is to use Saltedge to run its SCA and authentication process.
🇪🇺 Bunq partnered with Paysafe to allow its digital bank customers to make cash deposits.
🇬🇧 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.
🇬🇧 Ecommpay’s whitepaper finds awareness and understanding of open banking is still not widespread. 28% of consumers had “no idea” what Open Banking is.
🇬🇧 Yolt is shutting its consumer facing app to focus on its B2B open banking platform.
🇬🇧 Gr4vy has integrated Banked and GoCardless as payment options for their checkout product.
🇬🇧 Thought Machine signs a deal with Arvest, a US community bank for its Vault core banking solution.
🇬🇧 The first variable recurring payments hackathon launched which is hosted by Open Future World, Ozone and UK Finance.
🇬🇧 BoE officials look set to be cracking down on tech companies that provide cloud banking infrastructure to UK banks to ensure resiliency.
🇪🇺 75% of cashless transactions in Dach region (Germany, Austria and Switzerland) are now contactless, almost doubling from 40% pre-pandemic.
🇬🇧 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.
🙌🏻 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.
🇬🇧 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.
🙌🏻 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.
🌍 PayPal buys Japanese BNPL company Paidy for $2.7bn.
🌍 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.
🌍 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.
🌍 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.
🙌🏻 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 🔎
🇬🇧 Citizens Advice found that 1 in 10 BNPL shoppers are being chased by debt collectors.
🇬🇧 Sifted reports on the slow approval of applications for bank licences at the FCA.
🇬🇧 UK Finance found the number of impersonation scams doubled in H1 2021 to 33,115.
🇬🇧 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.
🇬🇧 The BoE has criticised some banks for failing to accurately provide data to help regulators identify risks in the financial system.
Longer reads 📜
Fintech Brain Food - Simon Taylor
🙌🏻 TWIF Take - Excellent post highlighting the nuance in fintech infrastructure. Opinionated vs build spectrum is a great framework of how to think about different vendors in the banking stack.
What at the moment looks like a toy in fintech but will end up being the next big thing? - Fintech Nerd Collective
A visual explanation of algorithmic stablecoins - Haseeb Qureshi
Shopify: A StarCraft inspired business strategy - Nongaap Investing
The evolution of DeFi across four financial primitives - Justine Humenansky
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See you next week!