Revolut is the hottest thing in banking. Yet it can't get a banking license ??????; U-turn & no BS, or why UBS ditched Wealthfront ??; Time to build??

???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. The real Amazon Bank is being built from the ground up in Latin America ??????
2. NFTs are gaining momentum in the music industry. Can they be the future of music? ??
3. PayPal's biggest threat is coming from around the Block and it's called Cash Pay ??
4. Apple overtakes the smartphone crown in the US, and why it can be huge for the company ??
5. Stablecoin Wars: who gains from Binance ditching USDC? ??
6. From FinTech to (Web3) Energy. What could go wrong? ??
7. Celebrities won't save FinTechs from themselves ?? ♀?
8. Global VC funding reaches lows not seen in years. To worry or not? ??
9. FinTech for influencers goes bust. A warning sign for vertical neobanks? ??
10. The Private Markets are in a consolidation period ??

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

Last week (5-9 September) was one of the most interesting and probably one of the most important weeks in FinTech this year so far.?Therefore, this newsletter issue is one of the most valuable ones in the last couple of months.

We will look at Revolut which is the hottest thing in banking, yet it can't get a banking license; the unexpected U-turn and no BS, or why UBS ditched Wealthfront; yet another proof of why it's time to build as the oldest venture capital firm in America closes?$4.6B across two new funds, and other interesting news and developments (+ lots of funding and bonus reads).

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

Revolut is the hottest thing in banking. Yet it can't get a banking license ??????

Major launch ???A Super App wannabe neobank?Revolut?just launched its first major marketing campaign, pitching itself to the?money underdogs?as their “way in” to new banking opportunities.

As much as it’s brilliant, the whole campaign and the context around it is really ironic. Let me explain.

More on this ???Directed by Craig Gillespie (the director of movies such as “Cruella” and “I, Tonya”), the campaign is titled “Your way in” and it depicts how people can “break into” new parts of the banking world. It features various characters crashing into areas across the world:

Visually, it’s absolutely brilliant. But the devil lies in the details…

The details??While inclusiveness and social justice are some of the hottest topics these days, it’s a slippery slope if you misuse them. That said, Revolut’s attempt to focus on the underserved as “underdogs” should at least be questioned as their ad depicts people participating in somewhat luxurious activities like using an expensive piece of workout equipment, buying expensive cups, or traveling.

Because the true “underdogs” of the banking world are people without access to bank accounts and basic financial services. In fact, much more real underdogs are those that don’t have money and the means to make it.

The bigger picture ???Revolut has 20 million customers worldwide, 5 million of which are in the UK, its home market. So while their commercial can be left out for different interpretations, maybe the question we should be asking here is?whether Revolut isn’t an underdog itself?

The more I think about it, the more I’m leaning towards YES. More importantly, it’s becoming increasingly difficult to believe Revolut will ever be granted a UK banking license. Here’s more on that, why it’s important & the takeaway:

?? THE TAKEAWAY

The irony, the struggle & world domination plans ???The irony just speaks for itself: Revolut has been pushing the narrative that people using it can “break into” new parts of the banking world while the neobank has been struggling to access this new world itself. Despite starting in 2020 and all the efforts put in place, it still hasn’t obtained a UK banking license. If that wasn’t enough, in July Revolut saw?high-profile departures?from its compliance, regulatory, and risk teams, all of which are significant roles for a would-be bank. On top of that, yesterday marked the latest nail in Revolut’s banking license application coffin - the?Financial Times?reported?that Revolut was the unnamed “financial services provider” that accountancy giant BDO was criticized for by the Financial Reporting Council. The watchdog flagged that BDO’s 2020 audit of the firm’s accounts could have led to “material misstatements” due to deficiencies in its tests around Revolut’s revenue recognition and payment processes. Hence, the more you think about it, the harder it seems to believe that Revolut will ever be granted a UK banking license. And without it, I won’t get a US banking license either, which is a critical piece in their?world domination plans. So maybe it’s not as hot as it seems after all?

Bonus: A major roadblock for Revolut’s Global Super App ambitions ??

Monzo’s crypto ambitions & challenger banks’ strategy triangle ??

U-turn and no BS, or why UBS ditched Wealthfront ??

The walk away?? ♂?Swiss investment banking giant?UBS?has ditched plans to acquire US robo-adviser?Wealthfront.

The context ???Originally announced in January, the acquisition was all about growing UBS’s operations in the United States. Now both companies “mutually agreed” to terminate the merger agreement, valued at $1.4 billion.

It’s worth noting that UBS will instead purchase a $69.7M note convertible into Wealthfront shares, still at a $1.4 billion valuation.

This u-turn by UBS is both surprising and not (especially in the current state of affairs) and raises some important questions about UBS’s strategy and the broader FinTech M&A climate. Here’s more on that + the takeaway:

?? THE TAKEAWAY

Building ?, buying ?, so what’s next?????When UBS announced it’s acquiring Wealthfront, I wrote that they chose buying instead of building strategy. And that made a ton of sense given that Wealthfront is one of the largest robo-advisers that would have brought more than 470,000 new clients in the US and more than $27B in assets under management, hence, giving UBS a solid start in a new market. More importantly, it would also have helped UBS target millennial and gen Z investors, a primary focus for Wealthfront. Hence, ditching this acquisition not only is a big setback for the Swiss lender's efforts to broaden its client base in the US. More importantly, it raises questions about their overall business strategy. Especially given its competitors from the Wall Street (i.e. JPMorgan Chase, Goldman Sachs, and Morgan Stanley) have ventured into new client bases in recent times beyond the high-net-worth individuals they traditionally served. Zooming out, one must note that a merger collapse is hardly novel in 2022 (remember what I’ve written about Galaxy Digital & BitGo), but this one is a bit surprising given that Wealthfront is a business that benefits from rising interest rates. Though Axios reported that unspecified regulatory concerns were raised in just the past several weeks, so maybe there’s something we don’t know that actually caused the deal to collapse. Looking ahead, we shouldn’t be surprised to see more such u-turns though it’s also clear that the M&A activity is currently in slow motion.

Bonus: The biggest crypto deal that never happened & what it means for the future ??

VC growth is slowing down, but we’re not seeing more M&As ??

Time to build: the oldest venture capital firm in America closes?$4.6B across two new funds ??

The close???Bessemer Venture Partners, the oldest venture capital firm in America, has closed $4.6 billion in new capital across two funds – $3.85 billion for its twelfth flagship fund, BVP XII, and $780 million for its inaugural BVP Forge fund.

Bessemer has a portfolio of more than 200 companies and over $20B of assets under management. Early-stage investments have included Pinterest, Shopify, Yelp, and LinkedIn.

More on this ???These two new funds allow the firm to back entrepreneurs and management teams across all stages of growth, regardless of maturity or structure.?

Bessemer Venture Partners focuses on early- and growth-stage venture capital investments through its current $2.4B BVP XI fund, $825M Century II growth fund, and $220M early-stage focused India fund that was raised in 2021. With BVP Forge and its dedicated Forge fund, the firm is expanding its flexibility to support growth buyouts with different liquidity, capital structure, and operational support requirements.

?? THE TAKEAWAY

Build, build, build ???Despite the global venture funding activity has slowed down, this new fund from BVP yet again proves that there’s enough dry powder that’s?sleeping?in the market right now. More importantly, it’s a piece of very good news for more mature companies (not only pre(seed) or Series A) that have been trying or thinking about raising capital lately. Remember - bear markets are for building, so get that sh!t done ?

And grab this if you haven’t yet:

Bonus: Triple your chances of getting funded with this cheat sheet ??

Extra Reads & Quick Bites for Curious Minds??

• Top license secured???????African payments technology firm?Flutterwave?has been granted a Switching and Processing License by the Central Bank of Nigeria, which is widely considered the most significant payments processing license in the country. The license gives Flutterwave permission to offer customers in the region switching and card processing services, as well as non-bank acquiring, agency banking, and payment gateway services. The company can now enable transactions between banks, FinTechs, and other financial institutions and can process card transactions, participate in agency banking and offer various payment services without any intermediary.?This is massive, but I might be biased a bit…
• Tech layoffs in Africa gaining speed? ???Kuda, the challenger bank based in Nigeria and the U.K., has joined the ranks of tech companies in Africa that are pruning their workforce. The news of the layoffs, which was first disclosed to TechCrunch by sources, was confirmed by Kuda via email, saying it laid off less than 5% of its 450-strong workforce or about 23 people.?Kuda joins the ranks of Swvl that laid off 400; Wave, approximately 300; 54gene, 95; and Vezeeta, 50.

Money Moves??

• Fleet InsurTech startup?Fairmatic?has emerged from stealth with a $42M Series A funding round led by Foundation Capital and Aquiline Technology Growth.?
• Swedish invoicing platform?Billogram?has raised SEK 150M ($13.9M) in an investment round to accelerate its growth in the DACH region — Germany, Austria, and Switzerland — as well as the rest of Europe.
• Investment firm?Aquila, a wholly owned subsidiary of Constellation Software, has acquired banking software solution provider?Cibar?to add trade finance solutions to its group of independent FinTech businesses.

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:

?? Bitcoin in 2021: a story in 5 graphs, and what might come in 2022

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

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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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