Monzo's fresh $5B valuation & ambitious yet questionable US expansion ????; JPMorgan bets big on Biometric Payments ??; Robinhood goes UK again ????

?? 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 last month:

1. Klarna's Resurrection: narrowing losses and preparing for the biggest IPO of 2024 ???? [a deep dive into their latest numbers to see what they mean & what’s next for Klarna + some solid bonus reads & further dives inside]
2. Robinhood’s new credit card goes after Apple in a push to become the primary financial hub ?? [unpacking all the details (economics, strategy, etc.) so we could see why it’s such a brilliant move from Robinhood + lots of bonus reads on this undervalued FinTech giant]
3. Digital remittances poised to transform Latin America's financial landscape ???? [analyzing & breaking down the latest report + bonus deep dives into Mastercard & LatAm’s FinTech gems Nubank & dLocal]
4. Visa & Mastercard reach $30B settlement in swipe fee battle, but it’s far from over ?? [what it’s all about, what will change & why it’s not over yet + some deeper dives into both Visa & MC]
5. AI is supercharging parametric insurance & transforming risk management ?? [what it’s all about, why AI in insurance matters & what’s next]
6. Western Union copies Revolut as it unveils global eSIM service ?? [the USP & where’s the money + some more reads on Revolut]
7. Dave hits profitability: disciplined FinTech disruptor with untapped growth potential ???? [a deeper dive into their latest numbers, uncovering what they mean + why you should be bullish about this underrated neobank]
8. Apple is dabbling in Open Banking even more with the new FinanceKit API ???? [what is it & why it’s a brilliant move + bonus dives into Apple building for the AI-driven finance future]
9. Stripe's growth continues as it passes $1 trillion in payments volume ?? [how big is the $1 trillion milestone, what does it tell us & what’s next + bonus deep dives into Adyen, PayPal & more]
10. Navigating the crowded merchant payment provider landscape ???? [a deeper dive into the latest analysis of the leading PayTechs + lots of bonus reads inside]
11. PayPal goes all-in on crypto remittances ?? [what it’s all about & what it means + what’s next & some bonus deep dives]
12. Pix is dominating & reshaping Brazil's payment landscape ???? [how Pix became such a success story & what’s next + a bonus deep dive into Nubank]
13. N26 turbocharges European expansion with high-yield savings accounts ?? [what it’s all about & why it makes sense + bonus dives into N26 and their strategy]
14. HUGE: the DOJ is suing Apple for antitrust. What it means for FinTech? ?? [this is a massive deal that will have huge implications for the future of FinTech]
15. Inside dLocal’s 2023 financials: emerging markets FinTech trailblazer poised for sustainable growth ?? [diving into their key numbers, uncovering what they mean & why this emerging markets FinTech might be worth your time and money in 2024]
16. Apple is getting into LLMs: here’s how their MM1 can revolutionize multimodal AI & drive innovation across ecosystems ???? [a deep dive into the tech giant’s multimodal AI breakthrough and how it will disrupt Apple Finance and other ecosystems + bonus read on how Apple can convert iPhones into financial powerhouses and lead in AI-driven finance]
17. Bolt and Checkout.com team up to make online shopping a breeze. M&A to follow? ?? [why Checkout.com should acquire Bolt soon + more bonus reads into struggling Bolt & Checkout]

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

We just closed another super exciting and hot month in FinTech. We will look at Monzo which secured a new round of funding at a whopping $5 billion valuation (a recap of the current status, future plans + a deep dive into why Monzo is unlikely to succeed in the US); JPMorgan that’s betting BIG on biometric payments in a quest to transform retail checkout forever (where’s the money at & why it makes sense + some bonus deep dives into JPM); Robinhood and their third attempt to conquer the UK (why it makes sense & will persistence pay off + some deep dives & bonus reads about Robinhood), and other interesting news and developments.

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

Monzos fresh $5 billion valuation and ambitious yet questionable US expansion plans ??????

The news ??? In a remarkable turnaround, the UK-based digital bank Monzo has just secured a fresh round of funding that valued the company at $5 billion ??

The British FinTech and neobanking champion raised $430 million from a diverse group of investors, including Alphabet's investment arm CapitalG, Chinese venture capital firm HongShan, and existing backers like Tencent and Passion Capital.

Let’s take a look at this.

More on this ?? This funding round represents a significant milestone for Monzo Bank , which faced existential challenges during the pandemic. As card transaction earnings plummeted, auditors raised concerns about the company's ability to continue operating. Additionally, Monzo was under investigation by the Financial Conduct Authority for potential breaches of anti-money laundering laws.

However, Monzo has since regained its footing. The company reported an 88% increase in revenue to $272 million in 2023 and achieved profitability in the first two months of the year. This remarkable turnaround can be attributed to the surge in loan impairments from the rapid growth of its Buy Now, Pay Later (BNPL) product and the rising interest rates, which have boosted earnings from cash and balances held at central banks.

Monzo plans ?? The influx of capital will fuel Monzo's ambitious expansion plans, particularly its renewed efforts to crack the US market. We can remember that in 2021, the company was forced to retreat from the US after regulators signaled their reluctance to grant Monzo a banking license. This time, Monzo plans to bypass the license requirement by partnering with an established bank (given the current market dynamics in the US, it won’t be easy…).

To spearhead this endeavor, Monzo has appointed Conor Walsh, a former executive at Block's Cash App division, as its US CEO. Walsh's expertise in the American market will be instrumental in navigating the competitive landscape and attracting customers to Monzo's digital-first banking experience.

Beyond the US, Monzo has hinted at plans to expand into European markets like Germany and France, where they believe there are "large revenue pools" and dissatisfied customers ripe for innovative banking solutions.

While Monzo's $5 billion valuation is impressive, it pales in comparison to its UK rival Revolut's $33 billion valuation achieved in 2021. However, Monzo has a distinct advantage – a full banking license – while Revolut is still embroiled in a protracted saga to obtain one from UK regulators.

ICYMI: Christmas present from Revolut: delayed 2022 accounts are finally here ?? [latest numbers & what they mean + what’s next & some bonus reads]

?? THE TAKEAWAY

Looking ahead ?? Despite the optimism surrounding Monzo's increased valuation and renewed expansion plans, the company's success in the US market is far from guaranteed. The American banking landscape is highly competitive, with well-established players and a growing number of digital-first challengers vying for market share. Moreover, Monzo's previous attempt to enter the US market failed, highlighting the challenges of navigating the complex regulatory environment and adapting to local consumer preferences. The company's ability to learn from its past missteps and leverage its digital-first approach will be crucial and yet it still doesn’t guarantee winning over American customers. The company's newfound profitability and the backing of deep-pocketed investors provide a solid foundation, but the road ahead is fraught with challenges. More on that below??

ICYMI: Monzo’s second attempt to conquer the US: here’s why the British neobank is more likely to fail than succeed ?????? [a deep dive + more bonus reads]

Monzo Magic: UK challenger bank reaches 9 million customer milestone ??[how Monzo hit the 9M customer milestone & what’s next + lots of deep dives & bonus reads about this FinTech gem]

The foray into wealth is finally here: Monzo launches investments ?? [a deeper dive unpacking this pivotal move for Monzo + more bonus reads]

JPMorgan bets big on Biometric Payments, aiming to revolutionize retail checkout ?????

The news ??? JPMorgan Chase, the largest US bank, is on a quest to make a significant leap in the payments industry by broadly launching biometric checkout services for its merchant clients in early 2025.

Let’s take a look at this and see why it matters.

More on this ?? The banking giant has partnered with biometrics specialist PopID to develop a service that allows consumers to make purchases by scanning their palms or faces, aiming to streamline the checkout process and enhance the personalized shopping experience.

With global biometric payments expected to reach $5.8 trillion and attract 3 billion users by 2026, according to Goode Intelligence, J.P. 摩根 sees immense potential in this emerging technology.

The bank has already conducted pilot programs with food service provider Aramark in Texas and plans to engage in more merchant pilots throughout 2023 before the wide-scale rollout next year.

To use the service, consumers will need to complete an initial enrollment process with 摩根大通 , which involves taking a selfie and providing payment card information. This data will be securely stored with the bank, enabling customers to opt for biometric checkout at participating merchants.

While there are perceived sensitivities surrounding biometrics, the bank is working diligently to ensure compliance with state and federal regulations and is employing best practices for privacy, consent, transparency, and data minimization. The bank believes that as consumers become more accustomed to using biometrics in various settings, such as mobile banking and airport security, confidence in the technology will grow.

JPMorgan's move into biometric payments is part of a broader trend, with companies like Amazon, Toshiba, Visa, and Mastercard also exploring this technology. Although there may be competition among providers, we can see more opportunities for collaboration, particularly in establishing industry standards crucial for widespread adoption.

?? THE TAKEAWAY

Why it matters? ?? As JPMorgan continues to invest in and refine its biometric checkout service, the bank is well-positioned to continue dominating the payments landscape. With its extensive merchant relationships and the launch of Commerce Solutions, a suite of cloud-based payments infrastructure and applications, JPMorgan is poised to offer a comprehensive, cutting-edge payment experience for both consumers and businesses. Looking ahead, the successful implementation of biometric payments could pave the way for even more innovative solutions, such as integrating loyalty programs, personalized promotions, and seamless returns and refunds. As consumer trust in biometrics grows and the technology becomes more sophisticated, JPMorgan's early adoption and ongoing investment in this space could cement its position as a leader in the digital payments revolution.

ICYMI: JPMorgan doubles down on growing the old-fashioned way: branches ?? [why it makes sense + a deep dive into JPM and how it recently made history]

Robinhoods third attempt to conquer the UK: will persistence pay off? ??

The launch ?? Robinhood, the Silicon Valley-based commission-free trading app, has finally launched in the UK. Again and after two previous failed attempts ??

But the company's timing seems to be spot-on, as the UK market is ripe for disruption, with a growing interest in retail investing and a desire for more accessible, low-cost trading options.

Let’s take a closer look at this.

More on this ?? Robinhood 's UK offering includes commission-free trading, zero foreign exchange fees, and an attractive 5% AER on uninvested cash and $2.25M FDIC protection. For the perspective, Revolut currently offers 5.10% APY in flexible accounts while Lightyear (a more direct competitor) has 4.5% APY on your GBP.

The company also provides access to over 6,000 US-listed stocks and plans to introduce local stocks and tax wrappers in the future.

However, its margin lending feature is currently on hold pending discussions with regulators.

Why UK? ?? The UK market presents unique challenges for US-based trading apps like Robinhood. European investors prefer localized offerings, including access to domestic stocks, local currencies, and tax-efficient investing vehicles.

Additionally, the UK has a well-established set of homegrown WealthTech startups, such as Freetrade or Lightyear, which have already captured a significant share of the market. Then there’s Public and WeBull which have recently entered the UK as well.

Despite these obstacles, Robinhood's persistence and strong brand recognition could work in its favor. The company's US success story and its ability to attract younger investors through user-friendly features and low costs may resonate with UK consumers looking for alternatives to traditional brokers. And once attracted, Robinhood’s gamified experience might keep them hooked and stay in the game for quite some time.

It won’t be easy… ?? Even with all the potential upside and clear advantages, Robinhood's launch comes during a challenging economic environment in the UK, with a recent recession and increased tax burdens limiting individuals' investing capacity.

The company will also need to contend with changing attitudes towards investing, as many Britons prefer lower-risk options like cash savings accounts, especially in the current high-interest environment.

Finally, the tract record is against Robinhood’s favor - we still have very few examples of companies from the US making it huge in the UK/Europe in finance.

?? THE TAKEAWAY

What’s next? ?? Robinhood's success in the UK will essentially depend on its ability to adapt to local market conditions, offer competitive features, and effectively engage with potential customers. If leveraging its brand recognition and user-friendly platform, the company can navigate the regulatory landscape, introduce localized offerings, and capitalize on the growing interest in retail investing, it may finally gain a foothold in the UK market and disrupt the WealthTech landscape. Looking at the big picture, a successful UK launch could serve as a stepping stone for Robinhood's broader European expansion plans. By establishing a strong presence in the UK, the company can gain valuable insights and experience that will help it tailor its offerings to other European markets.

P.S. It seems like Robinhood is planning to run its European operations out of Lithuania ????:

ICYMI: Robinhood posts surprise profit in Q4 2023, eyes return to growth ???? [a closer look to see whether Robinhood is worth your time and money in 2024]

If you’re in FinTech, you’re in Media: Robinhood acquires Chartr ??

Not just for degenerates: Robinhood is now luring wealthier investors ??

Extra Reads & Quick Bites for Curious Minds ??

• Klarna fined ?????? Swedish payments group Klarna must pay a fine of 7.5 million crowns ($733,324) for violating the EU's General Data Protection Regulation (GDPR) for not providing sufficient information to its users, according to a Swedish court of appeal ruling. Klarna failed to give clients sufficient information about how it would store their personal data, with the information being unclear or difficult to access. The case concerned privacy notes used between March and June 2020, which have since been updated. Under GDPR, companies are legally obliged to inform users and clients about how and why they handle personal data, including how they collect it and for how long they store it. Sweden's Administrative Court of Appeal raised the penalty back to the 7.5 million crowns originally sought by the Swedish Data Protection Agency (SDPA) after a lower court ruled last year that Klarna should pay 6 million crowns. ICYMI: Klarna's Resurrection: narrowing losses and preparing for the biggest IPO of 2024 ???? [a deep dive into their latest numbers to see what they mean & what’s next for Klarna + some solid bonus reads & further dives inside]
• dLocal-Ebury Partnership ??? dLocal and Ebury have joined forces to offer enhanced payment solutions across Africa's major markets. This collaboration aims to provide cost-effective, reliable, and diverse payment methods to clients. dLocal's One dLocal service will enable Ebury to accept payments, send payouts, and settle funds globally without managing separate processors. Ebury, a global financial services company, will benefit from secure and efficient pay-in and pay-out management, improved costs, and delivery times. The partnership also allows Ebury to support merchants in accessing complex emerging markets and gain access to over 41 regions in Africa. ICYMI: Inside dLocal’s 2023 financials: emerging markets FinTech trailblazer poised for sustainable growth ?? [diving into their key numbers, uncovering what they mean & why this emerging markets FinTech might be worth your time and money in 2024]
• Chase's Wealth Plan attracts millions of users?? JPMorgan Chase's free Wealth Plan digital money coach has helped customers create over a million personalized plans in just a year since its launch. Available on the Chase Mobile app and Chase.com, Wealth Plan provides the bank's 54M retail customers with a comprehensive view of their finances and assists them in planning, saving, and investing. Users can set and track short-term and long-term goals in real time, receiving personalized step-by-step guidance and insights. A goal simulator shows customers how different decisions made today can impact their financial future, and they can also schedule to speak to an advisor directly from the tool. In its first year, Wealth Plan has proven popular, with 10 million customers using it to update plans, get assistance to stay on track, and get closer to their goals. ICYMI: JPMorgan doubles down on growing the old-fashioned way: branches ?? [why it makes sense + a deep dive into JPM and how it recently made history]

Money Moves ??

• It’s done! UK-based Nationwide Building Society has reached a preliminary agreement to acquire Virgin Money for GBP 2.9B. ICYMI: Nationwide's ￡2.9 billion bid to reshape UK banking landscape ?????? [how this will reshape the UK banking landscape & what’s next]
• Goalsetter a US financial education platform focused on helping families learn how to spend, save, and invest, has raised $9.6M in a Series A extension round.
• Singapore-based B2B embedded finance startup Fairbanc has received $13.3M in debt financing to expand operations in Indonesia.

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 Resources for Startup Founders, CEOs, Investors & VCs ??

?? The Future of Finance: 10 FinTech & FinServ M&A predictions for 2024 ??

?? 10 FinTech and Finance stocks to include in your portfolio for 2024 ?? | Part I

?? The Future of Finance: 10 FinTech & FinServ M&A predictions for 2024 ??

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About: I am a business developer, sales professional, and FinTech strategist, as well as a 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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