Google Pay's Growing Threat to Neobanks; Wealthsimple's Pursuit of Becoming a One-stop-shop for Canadians’ Financial Needs; PayPal Plans for Super App

Hey, ?? fellow FinTechers! What a week it was in Finance & Technology... The best Weekly FinTech Digest yet is out!

P.S. Before we dive into what happened in FinTech last week, check out my Connecting the Dots Newsletter, where you will get much more. Every Week (Month in FinTech for March is OUT)????

Last week (3-7 May) was a super interesting and intense week in FinTech. Google Pay is rolling out a new set of features that should indicate a growing threat to neobanks; Wealthsimple nets a mega-raise and $3.7 billion valuation; PayPal blows Q1 earnings and plans a super app, and other super interesting news and developments.

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

Google Pay, a Growing Threat to Neobanks

Google Pay is rolling out a new set of features aimed at making Google Pay more a part of its users’ everyday lives. With an update, Google Pay will now include new options for grocery savings, paying for public transit and categorizing their spending.

Via partnerships with Safeway and Target, Google Pay users will now be able to browse their store’s weekly circulars that showcase the latest deals. Safeway is bringing more than 500 stores to the Google Pay platform, and Target stores nationwide will offer a similar feature. And soon, Google Pay will notify you of the weekly deals when you’re near a participating store if the location is enabled.

Another update expands Google Pay’s transit features, which already today support buying and using transit tickets across more than 80 cities in the U.S. New additions arriving soon now include the major markets of Chicago and the San Francisco Bay Area.

More importantly, among the new updates is an enhanced “Insights” tab that offers customers who link their bank accounts to Google Pay the ability to check their balance, view upcoming bills, and set alerts for larger transactions. Google also automatically categorizes customers’ transactions and is now enabling users to track their spending by category or by a specific business.

THE TAKEAWAY

Google has a massive brand, and that’s its core strength. Neobanks such as Chime, Varo, or Revolut lack the same brand recognition as the incumbents, but they seek to differentiate by leveraging their digital prowess into best-in-class digital customer experiences. Yet tech giants like Google have even more expertise in crafting digital user experiences, and they enjoy titanic brand recognition and existing user bases that they can market to cost-free. There are an estimated 131.2 million US Android users, not to mention those who use the Google search engine. Hence, customer acquisition and retention are now critical for the neobanks if they want to stay afloat.

Wealthsimple Nets A Mega-Raise & $3.7B Valuation

Canadian FinTech Wealthsimple has hit a C$5B valuation off the back of a C$750M funding round led by Meritech and Greylock.

DST Global, Sagard, Iconiq, Dragoneer, TCV, iNovia, Allianz X, Base 10, Redpoint, Steadfast, Alkeon, TSV, Plus Capital, plus celebrities Drake, Michael J Fox, Ryan Reynolds, Kelly Olynyk, Dwight Powell, and Patrick Marleau joined the round, which sees Wealthsimple more than double its valuation from its last funding round in October.

Toronto-based Wealthsimple began life as an online investment manager and trading app but has been busy expanding. The firm moved into crypto last year and has also recently rolled out a P2P money transfer service.

The new funding will be used to continue building out the product suite and to make hires.

THE TAKEAWAY

Wealthsimple pursues to become a one-stop-shop for Canadians’ financial services needs. Wealthsimple’s product suite now includes investing, savings, and money transfers, which is very much similar to what other neobanks offer in Canada. Although just five big banks dominate Canada’s banking sector (BMO, TD Bank, RBC, CIBC, and Scotiabank), digital banking is on the rise, and Wealthsimple’s customer and product growth is a positive sign it could challenge the incumbents. The newest funding should put more fuel to the fire.

FIT Partners with NYDIG to Provide Bitcoin Access To Clients

Cryptocurrency custodian NYDIG has partnered with banking technology vendor FIS to enable the latter’s clients to offer Bitcoin trading

Currently, consumers and corporations must establish new accounts, often with unregulated entities, and go outside of their traditional banking relationships to acquire bitcoin. The new solution taps into the advanced functionality of the FIS Digital One? Mobile solution to allow banks to provide bitcoin services via a seamless, easy-to-use digital experience - enabling them to drive fee income and better attract and retain customers.

The secure custodial and trading platform for managing the bitcoin transactions will be provided by bitcoin-focused financial services and technology provider NYDIG under a recently signed agreement with FIS. In late 2020, FIS and NYDIG partnered with Quontic Bank to enable the New York-based digital bank to be the first FDIC-insured financial institution in the U.S. to go live with a Bitcoin Rewards debit card.

In addition to the commercial agreement, FIS Ventures, the venture arm of FIS, made an investment in NYDIG for an undisclosed amount.

THE TAKEAWAY

Another step towards mainstream adoption of crypto? The Bitcoin trading partnerships will effectively help to level the playing field between small incumbent banks and challengers (i.e. Venmo or Revolut) and introduce a new revenue source for participating banks. As an effect, this should not only help to retail more digital-savvy customers but also be a good additional revenue stream, especially for the small banking players.

Extra Reads & Quick Bites for Curious Minds??

• Global e-commerce is expected to surpass $4 trillion in 2021, according to Adobe. Adobe has rolled out its Digital Economy Index showing that e-commerce surges in the US and globally, breaking records in March 2021, with Black Friday-levels of online spend.
• 94% of people in the APAC region consider using an alternative payment method in 2022, according to Mastercard findings.
• Swedish payment group Trustly has announced its IPO has been postponed after Sweden’s FSA has raised concerns about Trustly’s lack of due diligence on its end customers.

??Money Moves??

• Switzerland-based mobile payment provider Bluecode has announced collecting €20M in an investment round led by investment firm ‘Family Office Hopp’.
• Germany-based crypto custodian Finoa has received $20M in funding from UK-based venture capitalist Balderton for its next phase of growth and plans to build a crypto bank.
• Germany-based mobile banking app and a digital investment platform Vivid Money has announced raising €60M in the company's latest financing round. 

Quote of the Week/Food for Thought??

Africa (especially Nigeria) is lit when it comes to FinTech. Few get it though.

Graph of the Week ??

Really liked this generic architecture of financial ecosystems.

Week in Brief

Google Pay is rolling out a new set of features aimed at making Google Pay more a part of its users’ everyday lives. With an update, Google Pay will now include new options for grocery savings, paying for public transit, and categorizing their spending.

Canadian FinTech Wealthsimple has hit a C$5B valuation off the back of a C$750M funding round led by Meritech and Greylock.

Cryptocurrency custodian NYDIG has partnered with banking technology vendor FIS to enable the latter’s clients to offer Bitcoin trading

Continue reading by subscribing to Connecting the Dots Newsletter. You will receive fresh news about FinTech with hot takeaways every week (Monthly FinTech edition is OUT!).

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

?? The Perfect Pitch Deck: How Coinbase Raised Seed Capital and Began Journey Towards $100B Worth Public Company

?? Cutting Through the Noise: Bitcoin Fundamentals & Why it Was Created

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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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