Monzo's fresh $5B valuation & questionable US expansion plans ????; JPMorgan's missed HUGE opportunity: Discover deal that wasn't meant to happen ??♂

?? 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 week:

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. Bitcoin breaks records again: the relentless rally fueled by institutional demand ???? [analyzing the latest data, thinking about what’s next + two investment thesis for Bitcoin]
3. 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]
4. 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]
5. Nationwide's ￡2.9 billion bid to reshape UK banking landscape ??????
6. PayPal expands global payment solutions for small businesses with new all-in-one platform ????
7. Qonto continues FinTech consolidation with Regate deal ????

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

Last week (4-8 March) was another crazy hot and super intense week in the world of Blockchain and Cryptocurrency. We will look at Monzo which just 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 just missed the "company-changing" opportunity (why the Discover deal was never meant to happen for JPM + deep dives into the M&A, JPM and beyond), and other interesting news and developments.

Without further ado, let us dive into what happened in the Blockchain & Crypto sector last week. 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 Inc. 's investment arm CapitalG, Chinese venture capital firm HongShan, and existing backers like 腾讯 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]

JPMorgans missed a company-changing opportunity: the Discover deal that wasn't meant to happen ????

The news ??? Before Capital One's blockbuster $35 billion acquisition of Discover Financial last month, JPMorgan Chase had spent around a year actively pursuing its own potential deal to acquire all or part of the credit card giant, according to Financial Times.

Let’s take a quick look at what it’s all about.

More on this ?? The talks, codenamed Diplomat internally at J.P. 摩根 , were reportedly spearheaded by CEO Jamie Dimon himself in a bid to gain control of 发现金融服务公司 's Pulse electronic payments network.

Pulse is a rare breed - a pin-based debit network that processed a staggering $285 billion in payments in 2023 alone. Owning this tipo de red would have allowed JPMorgan to bolster its credit cards business while reducing reliance on major payment networks like Visa and 萬事達卡 . As one insider talking to FT described it, acquiring Discover would have been "a truly company-changing deal" for the banking behemoth.

However, 摩根大通 ultimately walked away from the negotiations around mid-2022 after failing to convince Discover's leadership of the merits of a sale or merger. Regulatory hurdles also loomed large, as JPMorgan's massive size and existing dominance in credit card lending likely would have raised antitrust concerns.

?? THE TAKEAWAY

Looking ahead ?? First and foremost, we must note that the fact that JPMorgan pursued Discover so vigorously yet underscores the fierce competition in the payments and wider FinTech sector. While Capital One's bid has smoother sailing from a regulatory perspective, some doubts remain about whether it will ultimately be approved given the sheer scale it would create. More importantly, had JPMorgan emerged victorious, the ramifications could have been massive. It would have leapfrogged Capital One to become the largest player in U.S. credit cards while vertically integrating with a major payments network. This could have reshaped consumer finances and commerce for years to come by combining two pillars of the financial system under one roof. Too big to fail would have become an understatement…

ICYMI: OFFICIAL: Capital One to acquire Discover for $35 billion ???? [quick recap of why it’s huge + some priceless bonus deep dives]

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]

Extra Reads & Quick Bites for Curious Minds ??

• Paytm Business Bank fined ???? Paytm's banking business has been fined 55 million rupees ($663,000) by India's Financial Intelligence Unit for money laundering charges. The fine was issued after a review found businesses involved in illegal activities, including online gambling, channeled funds through accounts with the unit. Paytm Payments Bank stated that the fine "pertains to issues within a business segment that was discontinued two years ago" and that it has since boosted its monitoring systems. The fine comes as the unit is under scrutiny from the Reserve Bank of India, which has imposed strict curbs on it over compliance issues, causing the parent company's share price to spiral downward. Paytm has now moved to cut "various inter-company agreements" with the business bank to reassure the central bank and market. ICYMI: Paytm’s turmoil after RBI crackdown ??
• Arf's onchain liquidity milestone???? Arf, a global transaction services platform, has surpassed $1 billion in onchain liquidity volume, supporting global payments. The platform addresses a $4 trillion liquidity gap through its RWA-based working capital solution, Arf Liquidity, which brings internet speed to international payments. Supported by Stellar, Arf leverages blockchain technology to provide enhanced access to the global financial system, solving real-world financial challenges. Arf's onchain transparency protocol ensures all financial activities are accurately represented, eliminating intermediaries and offering risk mitigation for liquidity providers. The company aims to expand into global transaction services, targeting $100 billion in transactions by 2025. This milestone highlights the growing adoption of blockchain technology in finance and its potential to transform global payments.

Money Moves ??

• Singapore-based B2B embedded finance startup Fairbanc has received $13.3M in debt financing to expand operations in Indonesia.
• Ethereum Layer 2 scaling solution provider Taiko has raised $15M in a recent Series A funding round.
• Open reputation protocol Karma3 Labs has secured $4.5M in fresh capital to increase trust in web3 with ratings and recommendations.

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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, 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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