Monday Fintech News #1 - Twitter, FTX, etc.
Monday November 14th, 2022
Happy Monday everyone, a lot has happened last week, it’s a good time to start writing about fintech news
The fintech ecosystem is moving fast, with changes across every sub-sector (payments, markets, retail, etc.) every day. To help you navigate them I decided to launch the Fintech Weekly Briefing, a newsletter including the top news of the week and M&A updates.
Top 3 news
Crypto - FTX files for chapter 11 along with ~130 affiliated companies, and its CEO Sam Bankman-Fried resigns 😱
After Binance backing out from a rescue acquisition, and FTX failing to raise $9bn from investors, the company has started the process of Chapter 11 bankruptcy in the US. Bankman-Fried has been replaced by John J Ray, a veteran Wall Street bankruptcy lawyer who led Enron through its bankruptcy process in the early 2000s.
What it means: While previous crypto crashes were related to macro-economic events or whales selling huge amounts of assets, this one is a milestone for the crypto industry, as FTX was one of the largest companies on the market. Since the news broke, the BTC value fell from ~20K to ~16K US$. Gabriella Kusz, CEO of the Global Digital Asset and Cryptocurrency Association, says "It appears that the crypto industry is having a bit of an ‘Enron’ moment […] We believe that similar to post-Enron, individuals and institutions will move capital away from less regulated, less transparent exchanges and towards those which have built heavily compliant, regulated and transparent operations”. Kraken’s management (the only exchange that was never hacked, but that operates with very limited transparency) might have something to say about that. 🤔
Sources: Finextra, CoindeskOpen banking - JP Morgan and Mastercard join forces to offer Pay-by-bank 🤼♀️
The new ACH payment (Automated Clearing House) system enables consumers to give access to their financial data seamlessly: At checkout, users select “Pay-by-Bank,” they can then find their bank, authenticate using their own bank’s process (e.g. biometric scan) and share their bank account information with JPMC to complete the payment on behalf of the biller. 🌊
What it means: After a peak following PSD2, customer-facing open banking has been slowing down (with closure of Yolt in 2022), only to pick up recently as companies have started to offer pro-active solutions (vs. reactive) for credit worthiness, personal finance, business payments, etc. With the rise of Banking as a Service, it was only a matter of time before open banking would open a new stream of personal consumer payment solutions.
Sources: Mastercard, Fintech Futures, FinextraRevolut to launch instant messaging functionality to its app, getting one step closer to a super-app 💪
Revolut chat allows users to send GIFs, stickers and messages in end-to-end encrypted conversations. This move comes after the company already rolled out features such as pet insurance, travel booking, cashback, stocks and shares and cryptocurrency purchases. More recently, the neo-bank launched a pro account aimed at freelancers and self-employed workers. The feature is currently available for users with UK or EEA accounts. As this happens, Twitter has also filed the paperwork to become a financial services company, with aim to become a super-app.
What it means: While WeChat has developed successfully as a super-app in China, Western companies trying to use the same model have had less luck. Pumpkin, a French payment app (acquired by Crédit Mutuel Arkéa in 2017 and shut down in 2022) had tried to include social media-like features on its app (such as a “Facebook-like wall”) with limited success. Larger, more successful companies taking up the challenge could lead to a better response from the market, but the WeChat success could also be explained by a different user demand in China and by state-imposed monopole in China, which helped the app grow within the country.
Sources: UKTech, AltFi, Charged.
Mergers & Acquisitions news
The slow market has recently forced fintech companies to show their capacity to survive in challenging times. Companies such as Bank North (middle market regional SME lending neobank) and Flux didn’t pass the test, as they have announced they are shutting down. Similarly, Marcus, Goldman Sach’s UK digital bank is scaling back its business to focus on wealth management.
14 fintech-focused SPACs need to find merger partners before they hit expiration dates in the next few months.
Hampleton Partners has recorded 591 deals for H1 2022, despite the wider M&A slowdown. This represented a 46% increase vs. H1 2021. This trend follows the drop in venture funding and worsening macroeconomic environment.
Sources: AltFi, Financial Times, S&P Global Market Intelligence,
Thanks for reading! More to come soon 😎
Francis