The Week in Digital Wealth (9/21/21)

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By: Gerelyn Terzo 

Financial institutions continue to target fintechs on their radar, but one global investment bank is getting the wrong kind of attention for its upcoming deal. Companies are trying to differentiate themselves in the buy now pay later pool. The deal pipeline is filling with M&A, SPACs and IPOs, and crypto trading is all the rage. 

Wall Street Wrap Up 

On Wall Street, Goldman Sachs is in the spotlight amid suspicious trading surrounding the firm’s plans to buy fintech lender GreenSky. On the day before the deal was announced, there were some questionable options trades in GreenSky, which caught the attention of analysts. Goldman on Sept. 15 revealed its plans to scoop up GreenSky in a $2-plus billion deal. On an average day, 1,000 options in GreenSky change hands. In the days leading up to the Goldman acquisition, however, 36,000 contracts were traded.  

JPMorgan is readying the launch of its digital bank across the pond to compete with the UK’s other challenger banks as well as legacy financial institutions. Rival firm Goldman Sachs introduced its Marcus digital banking app to the region three years ago. JPMorgan revealed its plans to make a push in London with its Chase brand, saying that it intended to do so with a digital version of the bank instead of brick-and-mortar locations. The international expansion is the first of its kind for the Chase division. 

Payments Push 

London-based financial app Curve is getting into the installment payment business. The company has introduced Curve Flex, giving consumers yet another way to buy now and pay later, the latest craze in consumer credit. Curve Flex, which was introduced on Sept. 1, is unique in that it allows users to transform purchases from the past year on a card linked to its platform into the installment payment model. Aside from that, Curve Flex is not limited to a certain pool of brands. The product has been in beta mode for the past year and has completed thousands of transactions worth over GBP 1 million. 

Also in the U.K., financial apps are becoming ubiquitous among the younger generation. According to a new Finder.com report, nearly two-thirds of British kids between 10-15 rely on a mobile app to budget their savings. Teens grow more dependent on money apps as they get to the older end of the age range. Children are also increasingly gaining access to debit cards in addition to financial apps, based on Google Trends data. While the financial apps might be growing in popularity, nearly three-quarters of kids turn to their parents for financial advice. A mere 14% of kids have become educated about money from their banks or financial apps. 

Crypto Trading 

As promised, PayPal has launched cryptocurrency trading in London. The company supports bitcoin, Ethereum, Bitcoin Cash and Litecoin, giving UK users the ability to transact in these cryptocurrencies directly from their PayPal accounts and via the app. 

Source: PayPal 

Coinbase wants to expand into bitcoin futures. The company has filed to become a cryptocurrency derivatives exchange to complement its spot market trading platform. Coinbase has filed its application with the National Futures Association (NFA), and if approved would give the CFTC regulatory oversight over the business. Coinbase called it a “next step” to broaden its offerings and “further grow the cryptoeconomy.” The crypto futures trading arm will be called Coinbase Financial Markets and will compete with the likes of the CME as well as Binance and Kraken, to name a few rivals. 

MoneyLion, which is behind an investing, banking and credit app, plans to jump into the cryptocurrency trading fray.  The startup is also gearing up for an IPO in the coming weeks on the NYSE. Now MoneyLion has revealed plans to support trading in bitcoin and Ethereum, going head-to-head with Robinhood and PayPal, for example. MoneyLion CEO Dee Choubey is also interested in exploring decentralized finance (DeFi) and NFT features for users. Similar to Robinhood, MoneyLion will offer zero-commission trades. The rollout will include a tool for users to stack sats by rounding up their debit-card transactions in bitcoin. 

Deal Pipeline 

Pagaya Technologies, a fintech startup, plans to go public via a SPAC deal that will attach a $9 billion valuation on the lending startup. Pagaya, which has a dual headquarters of the U.S. and Israel, is behind an AI-fueled technology used by banks to streamline the lending process and democratize borrowing for more individuals by collecting lots of data. Pagaya is combining with blank check company EJF Acquisition Corp, through which it will go public. EJF Acquisition has the backing of EJF Capital. The fintech plans to attract $200 million to its coffers through a PIPE tied to the SPAC transaction. Pagaya will be joining the likes of Upstart in the public markets, which has seen its stock soar more than 500% this year so far. 

Seattle-based remittance company Remitly has filed its S-1 document with the U.S. SEC to go public. The company has launched a roadshow to sell 12 million-plus of its common shares. Remitly plans to price the shares in the range of $38-42 and plans to list on the Nasdaq Global Select Market. In its filing, Remitly touts cross-border payments and banking as “two of the largest financial markets in the world.” 

Canadian wealth management firm CI Financial is buying Portola Partners, a Calif.-based RIA overseeing more than $5 billion in assets. CI Financial has been on the acquisition trail in the U.S. for the past couple of years. Portola counts among its client technology executives and venture capitalists, the average account size for which exceeds $100 million. CI Financial wants to become the top private wealth platform in the lower 48. 

Kudu Investment Management, which is behind capital solutions for wealth managers, has taken a minority stake in RIA Douglass Winthrop Advisors. For its part, DWA focuses on high-net-worth clients and oversees $4.8 billion-plus in assets. DWA will remain an independent entity, and the terms of the deal were not disclosed.