Visa to Acquire Plaid for $5.3B, Revolut Aims for $5B Valuation, Flutterwave Raises $35M, Nubank Now Has 20M Customers, Qonto Nets $115M in Series C

2020 has started with a big fat ??BANG??, as January was super hot and really exciting month in the world of FinTech. The hottest piece of the month was undoubtedly coming from Visa that announced it is to shell out $5.3 billion to acquire bank data sharing startup Plaid. To add, Spain's BBVA declared it is exploring the potential of selling financial products on Amazon, Flutterwave has raised $35M in Series B, Brazilian FinTech Nubank now has 20M customers, and much much more!

Hence, without further ado, let us dive into what has happened in the financial technology sector past month.

Gaming Group Razer Applies for Virtual Banking Licence; Ant Financial Joins Too

The first week of 2020 began with some interesting news coming from the FinTech arm of gaming company Razer that has applied for a virtual banking licence from the Monetary Authority of Singapore, with the aim of creating a full-scale digital bank targeting the millennial market.

Razer says it planning to extend its existing FinTech offerings in mobile payments to the digital banking market by building the world’s first Global Youth Bank.

The firm has teamed up with an array of homegrown and Asian companies to funds the project, including Sheng Siong Holdings; FWD; Linksure Global; Insignia Ventures Partners; and Carro. Under the agreements, Razer Fintech would retain a 60% stake in the new bank.

Technology and service partners include Justco, Quantifeed, Saxo Markets, Real Vision, SkyScanner, SoCash, Turnkey Lender, V-Key, and Visa.

Razer is the second non-bank to appply for one of five digital banking licences from Singapore's central bank, following a joint application from ride-hailing firm Grab and teclco SingTel. Chinese behemoth Ant Financial has also filed an application for a wholesale licence to service its corporate clients.

Shares in Razer - which has been building up its financial technology assets over the past year through its existing digital payments networks Razer Merchant Services and e-wallet service Razer Pay - soared on the news, gaining as much as 13.4% on the day as investors warmed to an offering designed to appeal to the company's young base of 70 million users.

BBVA Explores Product Sales via Amazon

During the same week, Spain's BBVA declared it is exploring the potential of selling financial products on Amazon.

The initial foray will see the bank join with renowned Spanish restaurant El Celler de Can Roca on the sale of a collection of products from the Michelin three-star restaurant’s recycling project; and Rocambolesc, chocolates and sweets crafted by Jordi Roca,the confectioner of the family.

BBVA says its intention is to move into offering banking products on the platform, using the pilot project as a way to trial the functionality of Amazon as an online store front for the bank's financial services. 

In a statement, the bank says:

Currently BBVA already sells close to 60 percent of its products over digital channels. Selling through Amazon would extend online sales opportunities, complementing the bank’s proprietary digital channels.

Amazon has not yet moved into selling financial services directly, and BBVA recognises that financial institutions must adapt to this way of selling.

ExxonMobil to Allow Drivers to Pay for their Gas via Alexa

The second week of January was really hot. ExxonMobil announced it is teaming up with Fiserv to enable American drivers to pay for their gasoline using Amazon Alexa.

Drivers with Alexa-enabled vehicles, Echo Auto, and other Alexa-enabled mobility devices will be able to say, Alexa, pay for gas when they pull up to the pump at more than 11,500 gas stations.

Alexa will confirm the station location and the pump number and then technology from Fiserv will activate the pump and facilitate token generation, with payments processed through Amazon Pay.

Devin McGranahan, Senior Group President for Global Business Solutions at Fiserv said: 

The age of connected commerce is here, and voice-activated smart devices will play a pivotal role in the future of payments by streamlining the way consumers make purchases every day.

Travelex Got Hacked

During the same week, Britain’s largest retail banks have been forced to halt processing foreign currency orders after a cyberattack on exchange provider Travelex.

Computer systems at the travel money firm have been down for more than a week since a malware attack on New Year’s Eve, leaving Lloyds, Barclays, HSBC and the Royal Bank of Scotland, among others, unable to process transactions.

The hackers have reportedly demanded $6 million in return for encrypted customer data. But in a statement late on Wednesday, Travelex said the system had been taken down as a “precautionary measure” following the discovery of the virus, and that its investigation had shown that customer data had not been compromised.

“We have now contained the virus and are working to restore our systems and resume normal operations as quickly as possible,” the statement said, adding that “Travelex’s network of branches continue to provide foreign exchange services manually.”

The attack was carried out by a ransomware gang known as Sodinokibi. The hackers told the BBC that they have downloaded 5GBs of customer data and plan to sell it online in six days’ time, unless Travelex pays the ransom.

Travelex said it is in discussions with the U.K.’s National Crime Agency (NCA) and London’s Metropolitan Police, both of which are conducting criminal investigations.

The banks have issued apologies for the inconvenience to customers on their respective travel money websites.

HighRadius Raises $125M

Again on the same week, HighRadius, a startup specialising in AI-powered order-to-cash and treasury management software, has joined the unicorn club thanks to a $125 million Series B round led by Iconiq Capital and joined by Citi Ventures and Susquehanna Growth Equity.

Houston-based HighRadius provides its integrated platform for accounts receivables and treasury management to more than 400 firms, including Citi and Bank of America Merril Lynch. 

The system optimises cash flow through automation of receivables and payments processes across credit, collections, cash application, deductions, electronic billing and payment processing. AI is used to automate tasks - such as extracting remittance data - that normally require human intervention.

Will Griffith, Partner at Iconiq Capital, said:

The HighRadius platform is game-changing for CFOs and finance departments, and the company has earned tremendous customer loyalty by enabling receivables and treasury teams to perform more efficiently and effectively, and by delivering mission-critical ROI.

Starling Aims for IPO and Forecasts Break-even by Year-end

Further, digital challenger bank Starling is eyeing a float on the London Stock Exchange within the next three years as it forecasts a first full year in profit by the end of 2021.

In an interview with the Daily Mail, Starling founder Anne Boden, commented:

I didn't do all of this to sell out to a big bank. I think the future for us will be an IPO in two to three years' time.

We're demonstrating a path to profitability that other digital banks have not, and we plan to break even at the end of next year.

In 2019, the fledgeling startup passed one million customer accounts and ￡1 billion on deposit, at the same time more than doubling employee headcount to 900+. 

Having raised ￡263 million since its founding in 2014, the bank posted a ￡26.8 million lossin 2018. In a New Year blog post, Boden takes a thinly veiled dig at app-only rival Monzo, which has racked up over three million customers since launch, but reported losses of ￡33.1 million in 2018. 

"I do sometimes wonder if those commentators on the fintech scene who prize customer numbers over quality of revenue, have been studying for the wrong test," she writes. "It doesn’t matter how many customers you have if you haven’t figured out how to be profitable and are spending huge amounts servicing unprofitable accounts. What matters is how people are using your bank."

At Starling the average age of customers is 35 for the personal account. The average balance on active personal accounts is ￡932, with an average of ￡1,140 coming into the account each month. 

Says Boden:

Average annualised revenue is running at ￡40 per active account, while our annualised revenue run rate is ￡30 million and growing at double digit rates every month. We expect to become profitable by the end of 2020 and to have our first full year in profit by the end of 2021.

Citi Partners YieldStreet to Offer Investment Opportunities to the Masses

Finally, the week was closed by digital wealth management platform YieldStreet that has struck a deal with Citi to make the bank's credit investments available to retail investors.

The partnership will see YieldStreet users get access to investment opportunities across private credit markets, including real estate, shipping and telecommunications. 

YieldStreet, which has originated more than $1.2 billion of investment opportunities since launching in 2015, says the Citi tie-up will enable it to respond to growing customer demand. About $2 billion of assets will be made available on the platform over two years, according to Bloomberg.

Citi is backing the partnership through its Spread Product Investment Technologies (Sprint) unit, which was created in 2018 with a focus on partnering with firms looking to reshape the $40 trillion debt and private credit markets. 

“We have always regarded YieldStreet as an innovative platform in the market, bringing institutional-style investments to a broad audience,” says Matt Zhang, Head, Sprint, Citi. “We’re really excited to partner with the YieldStreet team and believe there is a tremendous opportunity for us to scale our relationship together.”

Goldman Introduces Marcus App

If you thought that the last week was big - forget it! The 3rd week of January was a blast. Goldman Sachs has finally launched a mobile app for Marcus, the online retail banking brand launched in 2016.

While mobile banking apps have been the norm for years, until last week Marcus users had to visit the bank's website to view their accounts and carry out transactions. Now, customers can download an app from the Apple App store, with an Android version set to follow.

It may be late arriving, but the app is attracting glowing reviews on the App Store, with an average rating of 4.9 out of 5 from more than 150 users, with one declaring: "Exactly what I was waiting for!"

According to Reuters, the Marcus app was developed by engineers from Clarity Money, a personal finance startup acquired by Goldman in 2018.

Visa to Acquire Plaid for $5.3 billion

During the same week, Visa announced it is to shell out $5.3 billion to acquire bank data sharing startup Plaid.

Plaid’s products enable consumers to conveniently share their financial information with thousands of apps and services such as Acorns, Betterment, Chime, Transferwise and Venmo. Today, one in four people with a US bank account have used Plaid to connect to more than 2,600 FinTech developers across more than 11,000 financial institutions.

Visa, alongside rival card network Mastercard, joined a $250 million financing round in Plaid in September last year, that gave the company a $2.65 billion valuation. The $% billion price tag paid by Visa indicates a competitive bidding process to take over the company. Previous investors in Plaid include the likes of Citi, Goldman Sachs and American Express.

Al Kelly, CEO and Chairman of Visa, commented:

Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many FinTech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.

Plaid’s fintech-centric business opens new market opportunities for Visa both in the US and internationally, while providing a gateway to building closer relationships with FinTech startups. 

Adds Kelly:

The combination of Visa and Plaid will put us at the epicenter of the fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.

JPMorgan Chase was an early user of Plaid, opening up its account data to the company back in October 2018. 

Gordon Smith, Co-president, JPMorgan Chase and CEO of Consumer and Community Banking, said:

We believe Visa’s acquisition of Plaid is an important development in giving consumers more security and control over how their financial data is used. Protecting customer data and helping them share that information safely has long been a top priority for Chase. We look forward to partnering with Visa to continue building a great experience for our shared customers.

The company is also looking to expand beyond US borders, tapping in to the enthusiasm for Open Banking across Europe and other markets internationally. the company is opening a UK office to support European expansion and is initially supporting integrations with eight of the UK’s biggest banks and neobanks, giving British fintech businesses instant access to 70% of personal current accounts in the country.

Tradeshift Closes $240M Funding

Further, supply chain finance outfit Tradeshift has closed $240 million equity and debt funding round as it seeks to hit profitability in the "near future".

The new round, which is already more than two-thirds closed, will come from existing and new investors. Goldman Sachs and HSBC were among the participants in a $250 million Series A round in 2018.

Tradeshift enables supply chain payments and marketplaces for more than 1.5 million businesses globally, including global giants such as HSBC, Societe Generale, Air France-KLM, DHL and Fujitsu.

Launched in 2010, the Danish firm's ecosystem now enables alternatives for trade financing, spend and receivables management, lending and payments, and private marketplaces, helping to unlock what it claims is $9 trillion of capital trapped in online payments.

The company reported 60% revenue growth in 2019 but is now focused on profitability, promising to double down on successful areas such as Tradeshift Pay as well as a "rigorous focus on cost control measures" as it seeks to get its house in order ahead of any future IPO.

Christian Lanng, CEO, Tradeshift, said:

As we reach the next phase in the maturity of our business, our focus for the coming year will be about doubling down in areas where we’re seeing the greatest momentum while continuing to ensure we have the necessary balance in place to fully capitalise on the enormous opportunities in front of us.

Revolut Raise Set to Value Business at $5 billion

Finally, UK-based Revolut is on course to achieve a $5 billion valuation during an upcoming funding round, according to documents from lead investor Technology Crossover Ventures (TCV).

Financial News, which has viewed the prospectus, says the round is expected to close later this month.

Silicon Valley TCV, an early investor in the likes of Spotify, Airbnb and Netflix, closed a $3 billion fund in January 2019 to back fast-growing new economy companies.

Revolut, which is working on a global expansion strategy to take its bank-like services beyond Europe, had been hoping to prise more cash out of investors, placing a more optimistic $7-$8 billion valuation on its business last year.

Amazon is Working to Connect Credit Card Information to your Hand

The forth week of the month was equally interesting. It began with the news from Amazon which is attempting to turn your hand into a credit card, according to the Wall Street Journal. The company plans to enable customers to connect their credit card information to their palms, so they can complete purchases with a tap of their hand rather than their card.

Amazon has filed a patent for a "non-contact biometric identification system", featuring a scanner that produces an image of a person's palm. Similar technology is already in use in financial services, with biometic authentication provider, iProov, launching a palm verification service in February 2019, allowing customers of banks to verify themselves remotely by hovering their palm over their mobile device. 

The WSJ has reported that Amazon is working with Visa on this project, with Mastercard, JPMorgan and Wells Fargo also involved in preliminary discussions. It is likely Amazon will have been addressing potential concerns that are sure to be posed over the ability of terminals to detect fraud, as well as broader questions relating to privacy.

The WSJ reports that data collected from the terminals would be used to study spending habits and stored on Amazon's cloud. The plans would continue the online giant's attempts to revolutionise the way bricks-and-mortar stores operate.

This comes as Amazon plans to expand its chain of Amazon Go stores across the USA, which allow consumers to shop without cashiers or checkouts.

Flutterwave Raises $35M Series B from VISA & Worldpay

During the same week, San Francisco and Lagos-based FinTech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave  will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — commented. The company will also expand capabilities to offer more services around its payment products.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad. Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

The new round makes Flutterwave the payment provider for Worldpay in Africa. “With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the FinTech venture announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China. The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

FinTech Nubank Has 20 Million Customers

Moreover, Brazilian FinTech Nubank announced a new milestone: it has 20 million customers. This number is divided between customers that have a NuConta (the startup’s digital bank account) under their name and people registered for its annuity-free credit card.

This customer base size makes Nubank the sixth-largest financial institution in Brazil.

It’s reported that around 50,000 customers sign up for one of Nubank’s products every day. And the fintech hopes to close this year with 30 million customers (that’s a 50 percent jump!).

As for future plans, the unicorn will further develop its “Empréstimo Nubank,” a personal loan product. In addition, it wants to work on its PJ Account, a digital bank account aimed at small businesses which was still under prototyping as of last October.

It will prove interesting to see if PJ account is hot the way NuConta is.

Revolut Enters UK Savings Market

Moving on, during the same week, Revolut has entered the UK savings market, in partnership with Flagstone, offering premium account customers an easy-access savings account with a limited market-leading interest rate of 1.35% AER.

Revolut is aiming to tackle the consumer loyalty trap, where over a third (33%) of UK consumer cash is sitting in easy access savings accounts opened over five years ago receive interest rates 0.82% lower than accounts opened more recently.

The new account is an extension of Revolut's popular Vaults feature, which allows customers to round-up their card payments to the nearest whole number and instantly save their spare change. Launched in April 2018, over 2.5 million Vaults have been opened - with an average of 6,000 new Vaults created every day. To date, Revolut customers have put aside over ￡1 billion into their Vaults. 

Revolut premium customers - who currently pay ￡150 per annum for the privilege - can now convert their existing Vault into a Savings Vault and make regular and one-off payments into the account. Funds are deposited with Paragon Bank and protected by the FSCS up to a value of ￡85,000.

Nik Storonsky, Founder & CEO of Revolut says:

Interest rates have been minuscule in recent years, and this has directly impacted the options that people have when it comes to saving money. With the introduction of Savings Vaults, we can now offer our UK customers one of the most competitive rates in the country, with complete flexibility and protection.

Savings Vaults are currently only available in GBP to Revolut Metal customers whose sole tax residency is in the UK. Revolut Premium and Standard customers in the UK will be able to access Savings Vaults at a lower rate in the coming months. 

Revolut has set an unspecified limit on deposits earning the headline 1.35% AER rate. After this ceiling is reached, any new deposits will receive a lesser rate.

Challenger Business Bank Qonto Raises $115M

Finally, the week was closed by French startup Qonto that has raised a $115 million Series C funding round led by Tencent and DST Global. Today’s news comes a few days after another French fintech startup, Lydia, raised some money from Tencent. Existing investors Valar and Alven are also participating in today’s funding round. TransferWise co-founder Taavet Hinrikus and Adyen CFO Ingo Uytdehaage are also joining the round. Qonto says it represents the largest funding round for a French FinTech company.

Qonto is a challenger bank, or a neobank, but for B2B use cases. Instead of attracting millions of customers like N26 or Monzo, Qonto is serving small and medium companies as well as freelancers in Europe. According to the startup, business banking in Europe is broken. The company thinks it can provide a much better user experience with an online and mobile-first product.

The company has managed to attract 65,000 companies over the past two years and a half. The product is currently live in France, Italy, Spain and Germany. In 2019 alone, Qonto managed €10 billion in transaction volume.

With today’s funding round, the company plans to double down on its existing markets, develop new features that make the platform work better in each country based on local needs and hire more people. The team should grow from 200 to 300 employees within a year.

Qonto obtained a payment institution license in June 2018 and has developed its own core banking infrastructure. Around 50% of the company’s user base is currently using Qonto’s own core banking system. Others are still relying on a third-party partner.

Moving from one back end to another requires some input from customers, which explains why there are still some customers using the legacy infrastructure. Over the coming months, Qonto plans to launch new payment features that should convince more users to switch to Qonto’s back end.

Even more important, Qonto plans to obtain a credit institution license, which could open up a ton of possibilities when it comes to features and revenue streams. The company says that it should have its new license by the end of the year.

For instance, you could imagine being able to get a credit card, apply for an overdraft and get a small loan with Qonto.

Compared to traditional banks, Qonto lets you open a bank account more easily. After signing up, Qonto offers a modern interface with your activity. You can export your transactions in no time, manage your expenses and get real-time notifications. Qonto also integrates with popular accounting tools.

When it comes to payment methods, Qonto gives you a French IBAN as well as debit cards. You can order physical or virtual cards whenever you want, customize limits and freeze a card. Qonto also supports direct debit and checks. Like many software-as-a-service products, you can also manage multiple user accounts and customize permission levels.

Currencycloud Raises $80M

The last week of January was equally exciting as the beginning of the month. London-based B2B cross-border payments outfit Currencycloud has raised $80 million in a Series E funding round joined by blue-chip investors such as Visa, BNP Paribas and Siam Commercial Bank.

International Finance Corporation (a member of the World Bank Group) and SBI Group also joined the round alongside existing backers Sapphire Ventures, Notion Capital, GV, Accomplice, and Anthemis.

Since its launch in 2012, Currencycloud has processed more than $50 billion in cross-border payments. Last year it signed Visa as a client, adding to a list that includes major banking and FinTech brands such as Monzo, Revolut and Dwolla.

The firm says it will use the funding to expand its portfolio of payment methods and develop its partner ecosystem. And, having signed SBI and Siam up as investors, Currencycloud is now looking to expand in Asia, as well as North America.

Finally, the company is planning to invest in talent, with CEO Mike Laven insisting that this will include, despite Brexit, a growing UK team.

Laven commented:

Transfer of value is fast becoming the newest layer in the modern technology stack, and Currencycloud is positioned to provide the infrastructure to make this happen. With these new strategic investors, we are well placed to be the go-to provider for the next wave of FinTech innovation.

SoftBank Leads $125M Round in Latin America's AlphaCredit

During the same week, SoftBank has led a $125 million equity financing round in Latin America small business lender AlphaCredit.

AlphaCredit provides fast, cheap credit lines to individuals and small companies via a programmed deduction system. Operating in the Mexican and Colombian markets, the company has granted over $1 billion in loans to small business clients underserved by traditional banks or without access to other forms of financing. 

Augusto álvarez, co-founder and Co-CEO of AlphaCredit, said:

Cutting edge technology and strong financial backing have allowed us to grow exponentially while promoting the economic development of a greater number of people that have limited access to credit.

Other international venture capital funds along with a group of its existing investors have joined with Softbank in this Series B round.

N26 Now Has 250,000 Customers in US

Further, Berlin-based banking startup N26 claims to have recruited 250,000 new customers in the US, just six months after opening its doors Stateside.

The digital banking app now now boasts five million customers, a significant increase from its 3.5 million users last summer, with European markets proving the most fertile region for growth. With the US launch, operated in partnership with Axos Bank, N26 scents further opportunities for growth.

“American consumers are too reliant on traditional banks and face roadblocks to their financial health that have no place in the 21st century,” says Nicolas Kopp, US CEO, N26. “We’re incredibly proud to have reached a quarter-million US customers in our first five months and we are just getting started. We have big plans to offer millions of future N26 users a feature-rich, easy-to-use banking experience.”

Boasting a workforce of almost 1500 employees, N26 raised $470 million in equity financing last year, which bolstered its launch in both the US and Switzerland, as well as funding the opening of a new tech hub in Vienna.

Klarna Nets $200M & Launches in Australia

Finally, the month was closed by buy now, pay later outfit Klarna that has officially launched in Australia, backed by a further $200 million investment from Commonwealth Bank of Australia. Commonwealth Bank customers will be the first to try out the online shopping service through direct integration with CBA's mobile banking app. 

Purchased items will show up in the CommBank app and customers will also be able to take advantage of price drop and out of stock notifications directly from Klarna. Klarna will also be available to non-CBA consumers.

CBA CEO Matt Comyn said:

By partnering with Klarna, we are bringing together our market leading digital technology, merchant relationships and strong customer network with Klarna’s innovative payments technology and integrated shopping experience for the benefit of CBA customers and many more Australian consumers.

In August last year, Klarna raised $460 million in an equity funding round, including a $100 million investment from CBA. The new funding from the Australia bank brings additional rights and exposure to Klarna’s international growth. 

The total funding raises the bank's shareholding in the Swedish fintech to 5.5% from its initial 1.8% stake. CBA and Klarna will jointly fund and have 50:50 ownership rights to Klarna’s Australian and New Zealand business. CBA also retains a right to partner with Klarna in Indonesia.

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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 company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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