The banking crisis is far from being over ??; Wise is the European Robinhood ??

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???Hey,?Linas here!?Welcome to a????weekly free edition????of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.

If you’re not a subscriber, here’s what you missed this week:

1. ChatGPT for Finance is here, and it’s a game-changer????[it’s really BIG]
2. PayPal wants to dominate payments. And it can????[we will learn why & how]
3. OpenAI & Stripe kept the global VC funding alive in Q1????[look at the data + how you can triple your chances of getting funded this year]
4. If Hindenburg doesn’t kill you - it makes you stronger: Block is back???
5. Elon Musk believes Twitter could become a $250 billion PayPal rival???
6. Open Banking is getting really hot???
7. FinTech M&A is heating up as Acorns buys GoHenry???
8. Binance is rapidly losing its market share???
9. Ether is outperforming Bitcoin and making some serious moves???
10. The craziest FinTech fraud since FTX gets to the SEC???
11. Is Dutch neobank bunq making their biggest mistake ever?????[+ a deep dive into Monzo]

and more! Don't miss out and join the community here????

Last week (3-7 April) was another super important week in FinTech.?We will look at the banking crisis which is not yet over (things to watch & worry about); Wise, which is now basically the Robinhood of Europe (how they are moving into banking, why I’m bullish + 3 bonus reads), and other interesting news and developments.

Without further ado, let us dive into what happened in the financial technology sector last week. Let’s connect the dots.

The banking crisis is far from being over ??

The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come.

These were the words?JPMorgan Chase CEO Jamie Dimon said in his annual?letter?to shareholders on Tuesday.

He’s right.

The exodus of cash ???According to the Financial Times, the largest US regional banks began this year with less cash on hand than at any time since the 2008 financial crisis, leaving them ill-prepared for a rush of deposit withdrawals that led to the collapse of Silicon Valley Bank and Signature Bank.

As they adjusted to rising interest rates, the 30 banks with assets between $50 billion and $250 billion cut the percentage of their assets held in cash to an average of 7% at the start of 2023, from 13% a year before, as per Federal Deposit Insurance Corporation data.

That was less than half the cash held by the nation’s largest and more strictly regulated lenders, such as 花旗 and 摩根大通 , which on average had 15% of their assets in cash.

And that’s not it.

The exodus of deposits ???American Banks lost nearly $400 billion in deposits in March marking the biggest-ever monthly loss in bank deposits in US history ??

So what happened?

Following the collapse of Silicon Valley Bank (and later - Signature), people have reevaluated where they store their cash and have therefore moved it into things like bonds, money market accounts, etc. rather than keeping it in checking or savings accounts that basically pay 0% interest.

So $400B wasn't really "lost". It was parked elsewhere.

But here comes the interesting part.

?? THE TAKEAWAY

A problem in the making? ???This massive exodus might become a huge problem if and when the Money Supply continues to contract. And we're seeing this already to an extent. Having less cash in the form of deposits, banks will continue tightening their lending standards. On top of that, if the Fed continues to do quantitative tightening (= reducing its balance sheet), that can increase the odds of more bank runs. And more bank runs would lead to a full-blown banking crisis that can translate into a global recession. So buckle up, 2023 is getting wild.

Bonus: The rise and fall of Silicon Valley Bank???

Shotgun wedding: UBS buys Credit Suisse for $3.2 billion???

Wise is the European Robinhood ??

The news ???FinTech champion?Wise?has partnered with?Interactive Brokers?to offer customers a simpler way to invest their money.

More on this ???The partnership will enable Wise users to buy and sell stocks, exchange-traded funds (ETFs), options, and futures through Interactive Brokers' platform without having to leave Wise's website.

This will enable customers to make more informed investment decisions, as they will be able to access real-time market data and other investment tools.

The partnership is part of Wise's broader strategy to expand its financial services offerings beyond just currency exchange and money transfers.

?? THE TAKEAWAY

A wise bank ???At the core, this move is a clear indication that Wise is going after Robinhood’s territory (it might be an excellent time given?Robinhood?has left the UK market). More importantly, it’s clear that Wise is slowly moving from being a pure international payments provider to more of an alternative bank. And it makes a ton of sense. First, retail investing has been growing like crazy in the last couple of years (and especially accelerated during the pandemic) and it’s a massive market globally. Furthermore, it would be a good differentiator compared to other IMTO players (think Remitly, WorldRemit, or TransferGo). Finally, Wise claims to have over ￡2B in customer deposits, so by having more incentives for people to keep their money with Wise, FinTech would only win big time. Think about the increase in profits, growth in customer engagement, and potential satisfaction. I’m even more bullish on them now!

Bonus: FinTech champion Wise is one step closer to becoming a bank?????

Wise growth and undervaluation???

A Wise pitch deck that led to London’s biggest and most successful direct listing ever

Disclaimer: Wise is a partner of Flutterwave and I’m a shareholder of Wise

Extra Reads & Quick Bites for Curious Minds??

• Turning the sinking ship around ???Following its rescue sale last month, embedded banking platform?Railsr?has brought in a new management team, led by the former boss of blockchain firm Setl, Philippe Morel. Morel, who was CEO of Setl for four years until its acquisition in early 2023, is joined by new Railsr CFO Debbie Lotz and COO Nick Charteris. Last month Railsr was saved from collapse after agreeing on a sale to a consortium of investors led by D Square Capital.?Remember -?Revealed: once flirting with unicorns, Railsr was sold at a 99.8% discount???
• Going backward ???While last year FinTech giant Revolut made some slight improvements to its gender pay gap, this year the company actually saw its mean hourly pay gap increase from 22.7% to 25.4%. The rise means that Revolut’s gender pay gap last year was the largest in its reporting history, although Revolut did see some improvements in other areas.?Reread: The never-ending mess at Revolut????? ♂?
• Binance ???The Australian Securities and Investments Commission has?canceled?Binance Australia's derivatives license, according to a?press release?on Thursday.?Binance Australia, an arm of the world's largest crypto exchange by trading volume, has been ordered by the regulator to close all of its customers’ open derivatives positions by April 21. ASIC has been reviewing of Binance's businesses, the press release said.?Binance found itself in hot water with regulators last week, when the U.S. Commodity Futures Trading Commission?sued the exchange?for selling unregistered derivatives products in the U.S.

Money Moves??

• Tandem Bank, a UK-based challenger bank, has acquired?Loop, a socially-conscious money-sharing app, in an attempt to build a greener digital bank.
• FinTech platform?PhonePe?has halted its proposed acquisition of India-based Buy Now, Pay Later startup?ZestMoney.
• Singapore-based crypto gateway?Alchemy Pay?has partnered with web3 investment company?DWF Labs?to facilitate its expansion and secure $10M in funding.

Continue reading by subscribing to?Linas's Newsletter.?You will receive fresh news about FinTech with hot takeaways every day.

P.S.?You might enjoy my earlier pieces as well:

?? Top 10 FinTech predictions for 2023 ??

?? Top banking trends to watch in 2023 ??

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About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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