Venmo Goes Into Bank Waters; N26 Gets Licensed in Brazil to Take on Nubank; SoFi to Go Public via SPAC

Hey, ?? fellow FinTech enthusiasts & entrepreneurs! Trust you are all keeping well and safe. What a week it was... 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 December is already out)????

Last week (4-8 January) was a super intense and crazy interesting one in the world of FinTech. P2P heavyweight Venmo is going more and more against the incumbents with a new mobile check feature; German N26 received a green light from the central bank to launch in Brazil and go head-to-head against Nubank; SoFi to go public via SPAC, and more 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.

Venmo Goes Into Bank Waters - Launches Mobile Check Cashing Feature, Waives Fees for Stimulus Checks

Venmo is debuting a mobile check cashing feature and waiving fees when used to cash a stimulus check.

The feature introduced by a PayPal-owned Venmo is available to customers who have direct deposit attached to their account or a Venmo debit card.

Similar to banks' mobile check deposit features, users can upload a photo of their check to the Venmo app, and the money will be deposited into their account within a few seconds.

After waiving fees on stimulus checks cashed through the feature for a limited time, Venmo will charge at least $5 per check.

THE TAKEAWAY

Venmo is growing up and going against the big boys. The recent feature is a brilliant illustration of the rising FinTechs’ threat to legacy players - Venmo also has both debit and credit card offering to support its flagship P2P service. Also, the feature puts Venmo in league with a number of neobanks (i.e. Chime & Current) that are taking stimulus checks as an opportunity to pull in new customers and drive more value from existing ones.

N26 Gets Licensed in Brazil to Take on Nubank

The German neobank received a special FinTech-friendly license from the Brazilian Central Bank.

The German FinTech received a license from the Brazilian Central Bank to "carry out credit operations," including third-party credit analysis, and issue electronic currency in the country.

One must note that N26 first announced plans to enter Brazil in 2019, which CEO Valentin Stalf noted represents a much bigger opportunity than the UK, where the neobank withdrew early last year due to Brexit concerns.

The neobank's future goals include breaking even in late 2021 and raising additional funds, before going public in 2023 at the earliest.

THE TAKEAWAY

Brazil is a sweet place to be, but it won’t be easy. Brazil has a large addressable market because of its widely underbanked yet connected consumers. 55 million consumers in Brazil are underbanked, which is ~1/4 of the total population. Yet, 60% of the unbanked consumers have a cell phone or internet access, meaning a great opportunity for the new entrants. Local Nubank will undoubtedly be N26’s biggest headache - it’s dominant and holds an early mover advantage in Brazil. Not to mention it is the world's largest neobank by customers and one of the largest in terms of valuation, hitting 25 million users in June and a valuation of $10 billion as of its last funding round in July 2019.

SoFi to Go Public via SPAC

SoFi to go public in a merger with Chamath Palihapitiya’s newest SPAC.

Consumer FinTech SoFi is going public via a merger with special purpose acquisition company Social Capital Hedosophia Holdings Corp V, one of a series of blank-check companies formed by venture capital investor Chamath Palihapitiya.

The deal, confirmed by SoFi, would value the fintech at $8.65 billion according to the company’s statement.

It includes $2.4 billion in cash, encompassing $1.2 billion from a confirmed private placement (a PIPE instrument being led by Palihapitiya himself with participation from Altimeter, Baron Capital Group, BlackRock, Coatue, and others), $805 million in funding from the SPAC’s balance sheet, and additional funds from a prior investment into SoFi closed last month led by T. Rowe Price, according to TechCrunch.

THE TAKEAWAY

SoFi is one of the OGs when it comes to FinTech lending. It is a well-run company with strong revenue streams and most importantly - has the potential to go with a winner-takes-most outcome. Honestly, the $8.65B valuation looks rather conservative.

Extra Reads & Quick Bites for Curious Minds??:

• Cryptocurrency tax automation software startup TaxBit has received a new round of funding led by new investors PayPal and Coinbase Ventures, along with existing backer Winklevoss Capital. 
• US-based Oxygen, a challenger bank focussing on freelancers and the gig-economy, has announced raising USD 17M in Series A round of funding.
• Affirm Aims at $9B Valuation in New SEC Filing.
• Orange Bank, which is own by a French multinational telco, has purchased the neobank Anytime, which focuses on small companies, independent professionals and associations. The goal? To expand into (SMBs) and small offices/home offices (SOHOs) segments.
• Banking-as-a-Service provider Mambu has announced its latest funding round of EUR 110M in new capital, led by TCV, whose investments include Netflix, RELEX, Spotify, and WorldRemit. 

Quote of the Week/??Food for Thought??

Although Simple is shutting down, we shouldn’t be sad. Quite the opposite - we should value them being among the first ones and hence paving the way to many neobanks and FinTechs we see today (read more about Simple on Connecting the Dots)

Graph of the Week

Digital banks like Chime, Acorns, and Dave have accumulated millions of users in the past few years.

Week in Brief

Venmo is debuting a mobile check cashing feature and waiving fees when used to cash a stimulus check.

The German neobank received a special FinTech-friendly license from the Brazilian Central Bank.

SoFi to go public in a merger with Chamath Palihapitiya’s newest SPAC.

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

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

?? These are the Best Performing Stocks of the Last Decade

?? Welcome to the Google Bank - Your Everyday Banking from Google, NOT a Bank.

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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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