Weekly update #51

Welcome to this edition of the weekly newsletter. The idea behind this is to gather all the information in the startup ecosystem in one place, with a special focus on the fintech market.

The latest episode of Builders has been released this week. In this episode, I sit down with Ethan Singer , CEO and Co-founder of Mighty Partners , to talk about the Australian fintech market and the Venture debt environment.

You can find the complete video interview here on YouTube, or you can listen to the podcast here on Spotify or here on Apple Podcast.

As always, if you are a VC manager or a founder and want to be the next guest on the podcast feel free to send me a message on LinkedIn!

Coming back to us, this week I read an interesting report from 麦肯锡 (I love their newsletter, highly suggested!) about retail banking, in a report called “The state of retail banking: Profitability and growth in the era of digital and AI”. A very interesting study on the status of retail banking, involving actual trends in fintech and the impact of digital and AI. Here my main takeaways:

In recent years, retail banking has experienced significant growth and profitability driven by various macroeconomic trends. In certain regions, pandemic-era government stimulus boosted economic growth, increased consumer spending, enabled balance sheet expansion, and kept credit risk low. After the pandemic, rising interest rates improved banks' net interest margins as loan interest grew faster than deposit costs.

Globally, banking Return on Equity (ROE) reached approximately 12 percent in 2023, the highest since the global financial crisis and above the 9 percent average from 2013–2020. Leading regions include Latin America, the Middle East and Africa, and Emerging Asia (excluding China), each with up to 17 percent ROE for 2023. North America followed with 10 percent ROE, while Developed Asia, China, and Europe reported up to 9 percent ROE.

In 2023, the global retail banking market surpassed $3 trillion in revenue, backed by sustained annual growth of about 8% in recent years. This positive performance was geographically widespread, with revenue growth accelerating in several regions between 2020 and 2023 compared to 2013–2020. Europe saw growth accelerate to an 8.7% compound annual growth rate (CAGR) from 1.5% CAGR.?

Developed Asia increased to a 7.0% CAGR from 3.3% CAGR, while Emerging Asia (excluding China) rose to an 11.2% CAGR from 6.9% CAGR. Latin America jumped to a 19.0% CAGR from 10.3% CAGR, and the Middle East and Africa grew to a 10.0% CAGR from 4.4% CAGR. This acceleration was driven by higher interest rates and increasing financial inclusion.

North America showed stable growth of 5–6% throughout the period. In contrast, China's retail banking revenue growth slowed significantly from 11% to 3%, primarily due to weaker economic expansion.

Digital retail banking channels are accounting for a growing share of product sales, especially for cross-selling simple products like credit cards and personal loans. These channels are also valuable for increasing customer lifetime value and boosting retention. For instance, North American banks with top-quartile digital adoption have half the attrition rate of bottom-quartile players.

Globally, the share of consumers actively using mobile banking increased by 18 percentage points between 2020 and 2023, reaching 57%. The number of annual mobile service touchpoints per customer grew by 72%, reaching 150 touchpoints in 2023, surpassing some leading e-commerce players. This indicates a customer preference for the convenience of mobile banking for simpler interactions.

Conversely, other channels have seen declines. Active branch users decreased by 2 percentage points from 24% in 2020 to 22% in 2023, and online banking users dropped by 4 percentage points from 28% to 24%. Contact center usage decreased by 3 percentage points, from 15% to 12% over the same period.

The annual number of customer service touchpoints per customer also declined in other channels between 2020 and 2023: branch interactions decreased by 40% (from 5 to 3), online interactions by 22% (from 23 to 18), and contact center interactions by 32% (from 3 to 2).

The share of core product sales through branches fell by 13 percentage points, from 66% in 2020 to 53% in 2023. In contrast, mobile sales increased by 13 percentage points, from 9% to 22%, and online sales grew by 4 percentage points, from 14% to 19%. Sales via contact centers decreased slightly by 1 percentage point, from 5% to 4%.

The overall feeling is: there is no more such a thing as traditional banking. Everything is moving to digital, if not mobile only.?

Anyway we saw some very interesting news in the market this week. Revolut released a new payment terminal for in-shop transactions, Klarna sold its loans portfolio to Elliott Investment Management L.P. , and the italian government introduced a 42% capital gain tax on Bitcoin. Stripe is in talks to acquire Bridge for $1billion, Invex Ventures acquired the british fintech Manigo and Klarna again is now available as payment method on 苹果 Pay. In the VC market, we saw 20VC raising a $400 million new fund (Congrats Harry Stebbings !), Adams Street Partners securing $1.2 billion in commitments for its latest fund, and Swedish Vc node.vc securing $71 million for their first fund. In the italian market, PausePay - il Buy Now Pay Later B2B italiano closed a partnership with Visa , and Axyon AI raised a $2.1 million round. Finally, we saw some very interesting rounds from fintech companies like Zeal , OCTA - AR Automation , Imprint , Acquired.com , Omnea , Najar (ex Welii) , Helicap , Yellow Card , Tebi and many others.

But let's take a closer look at the main news of the last seven days:

Closed deals

• San Francisco based Zeal raises a $15 million series B round led by Portage?
• MENA based fintech OCTA closes a $2.25 million pre-seed funding round
• New York based fintech Imprint raises a $75 million Series C funding round
• Fintech startup Acquired.com raises $4 million from Beach Point Capital Management
• Helicap secures $3 million investment from GMOペイメントゲートウェイ株式会社
• AI powered risk management platform Omnea raises a $20 million round led by Accel
• Fintech startup Welii rebrands as Najar (formerly Welii) and raises a $15 million series A
• London based B2B fintech startup Diesta raises a $3.8 million seed round
• Amsterdam based fintech Tebi raises a $20 million funding round led by Index Ventures
• African crypto startup Yellow Card App raises a $33 million round led by Blockchain Capital
• Mexican fintech albo secured a $60 million credit line from SixPoint Capital Management

Insights on the VC industry

• Tensor Ventures launches a €50 million fund to back deep tech startups in east of Europe
• Episode 4?
• 20VC, the British VC launched by Harry Stebbings, just announced the closing of their third fund at $400 million
• Hong Kong based VC MindWorks Capital raises a new $220 million fund
• Adams Street Partners raises $1.2 billion in commitments for its fourth fund
• Swedish VC node.vc closes a first fund at €71 million
• VanEck closes a $30 million early stage fund to back fintech and crypto startups
• Seasoned investor Anthony Danon has launched Rerail, a fund targeting fintech and fintech-adjacent startups globally
• Austin based VC KdT Ventures closes Fund IV at $250 million to back early stage startup

News on the market

• Revolut wants to takes on Square and SumUp launching a new payment terminal for large businesses?
• TD has agreed to pay a fine of about $3 billion related to failings in AML processes
• Banco do Brasil partners with Cielo to launch Pix by proximity payments in the country
• SoFi closes a partnership with Fortress Investment Group for $2 billion of personal loans
• Klarna will sell most of its BNPL portfolio loans to Elliott Investment Management L.P. to free up capital for expansion
• Italian government is raising capital gain taxes on Bitcoin up to 42%
• German fintech Solaris SE will lay off a third of its workforce
• We anticipated this news a while ago, but now it's official: Barclays is taking over the General Motors credit card business from Goldman Sachs
• PE fund Warburg Pincus LLC has acquired a minority stake in Brazilian fintech Contabilizei for $125 million
• Invex Ventures completed the acquisition of London based fintech Manigo?
• UK based Ziglu has agreed to acquired the Gibraltar-based damex.io in an all-stock deal
• Italian software provider TeamSystem invests in Techstars backed Deliverart - Food delivery software
• Klarna is now available as payment option at checkout in Apple Pay
• Stripe is in talks to acquire crypto startup Bridge for $1 billion
• Reserve Bank of India (RBI) ordered many fintech non-bank lenders to halt loans citing excessing interest rates

A special look in the Italian market

• Italian fintech PausePay - il Buy Now Pay Later B2B italiano strikes a partnership with Visa to offer deferred payments
• Italian fintech startup Axyon AI raises a €2.1 million funding round?

And here some useful resources for everyone involved in the ecosystem:

Events you don’t want to miss

• VDS+ | Valencia 23-24.10.2024 (Link to the invite or website)

You have a cool event you want to mention or to sponsor? Feel free to send me a DM.

Startups raising funds

• Loyyal - Loyalty platform from the MENA region, with entities in the US and South East Asia, provides a B2B2C platform to handle multiple loyalty programs and earn rewards all over the world. Raising a $6M Series A
• Freedhome - Proptech and fintech platform, enabling people to be able to gain profit from real estate by renting them to intermediaries. Raising a $1M seed round

• PopulaRise - The platform that allows companies of every dimension to promote themselves on social media through the collaboration with their clients. B2B2C SaaS. Raising $1M.
• Tutornow - Edtech that provides an online tutoring platform for students with learning disorders. Raising $500k to $1M.
• Recivu - Fintech? startup trying to digitize the receipt flow by getting rid of papers. Looking for $150k in SAFE, already $50k committed.
• Weagle - B2B Tech startup that provides the very first browser designed for company, with total security for sensitive data. Raising $6 millions for their seed round.

• Reach Finance - Reach is the fintech platform for wealth accumulation for the Y&Z generations, they provide users with the tools to build wealth such as a budget tracker, a financial plan and a systematization of investments. Looking for $700k, with already $500k committed.
• wrapp.ai - A fintech startups that offers a virtual accountant and CFO that can help SMEs scale globally. Looking for $1 million, $750k already granted from public funds, looking to close the last $350k.
• Shoppy Code:Gift card platform that offers a points based loyalty program. They share part of the profits coming from marketing budgets with their customers. Raising $500k.

Take also a look at the last edition of the newsletter, Weekly update #50