The Week in Digital Wealth (6/29/21)

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By: Gerelyn Terzo 

The deal pipeline is filling in the fintech space, chief of which includes Visa flexing its muscle in Europe’s open banking industry. Kids are gaining access to financial apps sooner than later, thanks to one UK-based challenger bank. In addition, a couple of German fintech startups are looking to gain a foothold in the US market while the IPO pipeline keeps growing. Andreessen Horowitz has made a key hire and is doubling down on crypto despite a murky regulatory environment. Let’s dive in.

Deal Pipeline 

Visa is making a big bet on the fintech space. The card giant is acquiring a Swedish fintech startup called Tink in a USD 2 billion-plus deal. Tink paves the way for Visa to enter Europe’s burgeoning open banking segment, helping to bridge the gap between users and thousands of financial institutions. Open banking is a growing trend in Europe, allowing financial service providers access to a consumer’s data across providers, with the user’s okay. Tink’s technology lets other fintechs like PayPal and banks, which serve a combined 250 million European customers, build apps so that consumers can streamline their accounts onto a single platform.  

Also in Europe, German fintech startups and formal rivals Raisin and Deposit Solutions are joining forces in an attempt to better compete in the region and beyond. The companies, which are merging, have competed in the savings accounts and products market, where they match banks with savers and where there have been redundancies. The management teams are looking to become a powerhouse in Europe, but they also have their sights on taking market share in the United States. The new entity will be dubbed Raisin DS and will be based in Berlin, boasting hundreds of banking partners and employees alike. 

Andreessen Horowitz on the Crypto Hunt 

VC firm Andreessen Horowitz has raised another multi-billion dollar cryptocurrency fund — its third one to date — despite the downturn in the bitcoin market and an uncertain regulatory environment. The $2.2 billion investment vehicle was oversubscribed and will target companies that are dedicated to growing the cryptocurrency space. 

In particular, the fund will reportedly focus on non-fungible tokens, or NFTs, the latest industry craze. NFTs are digital tokens comprising art, video, music or pretty much anything creators of these assets can imagine. Andreessen Horowitz co-chair Kathryn Haun reportedly likens the cryptocurrency industry to the internet during its investment boom. 

On another note, the venture capital firm has tapped popular fintech executive David Haber as a NY-based general partner for its a16z fund. Haber was also the CEO and founder of Bond Street, a digital finance business for small businesses that was eventually scooped up by Goldman Sachs. At a16z, Haber will focus on fintech investments including those in the crypto industry. 

Ant Group Appeases Regulators  

China’s Ant Group has been undergoing a transformation ever since regulators rebuffed the payment company’s attempt to go public in a dual listing last year. Most recently, Ant is engaging with state-owned entities in the mainland to launch a credit-scoring arm that would give regulators access to the financial habits of the 1 billion-plus users on its platform. The credit venture could see the light of day as early as Q3 2021 and has the potential to be operated by government-owned companies. The idea is to harness data from the Ant platform to determine credit scores for consumers. 

Kids Go Fly a Kite 

UK-based Starling Bank has paved the way for kids between the ages of six and 16 to access its app tied to a Kite-branded debit card. Kite has its own real estate on the Starling app, from which young users, with the green light from a parent or guardian, can view a balance or transactions as well as receive alerts on spending via a mobile device or tablet. The Kite debit card is tied to the account of a parent or guardian, while kids gain exposure to living a cash-free financial life. 

IPO Splash 

San Francisco-based Blend Labs, a cloud-based mortgage company, has publicly revealed its intentions to go public. The company previously confidentially with the U.S. SEC, but now it has made those documents public. Blend plans to list its shares on the Big Board and trade under the symbol BLND. The startup’s co-founder, Nima Ghamsari, could potentially be looking at a $10.9 billion windfall thanks to stock options — if the IPO does well — amid a compensation package that is modeled similarly to Elon Musk’s. 

South Korean mobile bank Kakao Bank is looking to amass $2.3 billion in an IPO. Based on the details of the filing, Kakao Bank, which is backed by internet company Kakao Corp, could be valued at more than $16 billion, giving it a market cap that rivals the likes of financial services firms KB Financial and Shinhan Financial. South Korea began granting online banking licenses six years ago. 

Blow to Binance

Leading cryptocurrency exchange Binance was dealt a blow after British regulators decided to ban Binance Markets Limited (BML), the trading platform’s London-based affiliate, from performing any “regulated activity in the U.K.” The move is an extension of the regulator’s crypto crackdown after the Financial Conduct Authority previously banned retail investors from trading cryptocurrency derivatives in the region. 

Effective on June 30, Binance must publish a notice to users that it is required to refrain from supporting any “regulated activities” without the green light from regulators. Binance was quick to clarify that BML is a “separate legal entity” from its main site, Binance.com.  

Source: Twitter 

CBDC Update 

Meanwhile, the Fed’s Randal Quarles is poised to address central bank digital currencies (CBDCs) in testimony at this year’s Utah Bankers Association Annual Convention. China is already in the lead on CBDCs, which are digital forms of central bank money that can be sent in a faster and cheaper way than traditional banknotes. The Fed’s CBDC plans have been moving at a snail’s pace, but Quarles could shed some light on what the project could entail from a regulatory perspective.