What’d I miss? News and Insights that got noticed

Key themes this week (July 28–August 3)

• Klarna ditches open banking brand
• Figure withdraws bank charter application
• US Banks Tightening Loan Terms Rises to 50.8%
• Local Malls, Stuck in ‘Death Spiral’

Mercury Financial secures $200m debt facility to expand credit card business

"...Founded in 2017 and headquartered in Austin, Texas, Mercury Financial utilizes over 100 million data points to provide middle-class Americans with access to credit through its credit card and mobile app offerings. It claims to serve more than 1.5 million customers.”

Key takeaways:

• The new facility will be used to originate additional credit card accounts and boost the growth of its existing relationships
• Jason Whiting: “We see a massive opportunity for Mercury to reach our near-prime target market, which so many banks and non-bank lenders ignore”

LinkedIn Post

Klarna ditches open banking brand

"...Last April, the Swedish firm decided to introduce a separate brand, Klarna Kosma, offering financial institutions, fintechs and merchants the connectivity to build FS apps and services by providing simple and secure access to 15,000 banks in 24 countries through a single API.”

Key takeaways:

• The brand is now being scrapped with the business being folded under the main Klarna corporate brand
• Klarna say that the decision is based on the unit's success and a desire to link it more closely with the main business. There will be no job losses

LinkedIn Post

Local Malls, Stuck in ‘Death Spiral,’ Plunge in Value

"... Older, low-end malls are worth at least 50% and in some cases more than 70% less than they were when mall valuations peaked in late 2016, said Vince Tibone, CFA, head of U.S. retail and industrial research for real-estate research firm Green Street.”

Key takeaways:

• Now, as more than $14 billion of loans backed by these properties comes due in the next 12 months, according to Moody’s Analytics, struggling malls are defaulting on their debt
• -About a fifth of all malls financed through commercial mortgage-backed securities are underwater, meaning the properties are worth less than the loans they back
• “You start losing department stores, that causes sales and traffic at the center to decline. Then more tenants leave. It starts this awful cycle.”

LinkedIn Post

Musk Buys AI.com From OpenAI

"… As soon as some users were getting used to typing ai.com on their search bars and getting redirected to ChatGPT, Elon Musk decided to change their habits. Now, the same domain leads to Musk’s upcoming AI company, xAI."

Key takeaways:

• Sam Altman led OpenAI bought the domain in February in a bid to make AI synonymous with ChatGPT. The move was possibly to get itself ahead of competitors like Google and others in the AI race
• Being one of the co-founders of OpenAI, Musk has decided to make his company the center of AI, and bought the username from OpenAI

LinkedIn Post

US fintech Rocket Companies appoints Varun Krishna as new CEO

“…Detroit-based financial services and consumer lending firm Rocket Companies has announced Varun Krishna as its incoming chief executive officer (CEO), while also confirming the departure of its president and chief operating officer (COO), Bob Walters.”

Key takeaways:

• Varun Krishna is Rocket Companies’ new CEO Krishna joins the fintech from San Diego-based financial software company Intuit, where he has served as EVP and GM of its consumer group since May 2022
• Now he is to be instated as the CEO of Rocket Companies, effective from 5 September and succeeding Bill Emerson, who has served as the company’s interim CEO since June

LinkedIn Post

Figure withdraws bank charter application

"...Blockchain startup Figure Technologies is no longer seeking a national bank charter, according to the Office of the Comptroller of the Currency.”

Key takeaways:

• Figure, which was started by former SoFi CEO Mike Cagney, withdrew its application for a bank charter Monday
• Figure first applied for a bank charter in 2020, saying at the time that a national charter would simplify the complexity of its business and allow it to serve more underrepresented customers
• Figure is also planning to take its lending arm, LendCo, public early next year, according to the wire service

LinkedIn Post

Proportion of US Banks Tightening Loan Terms Rises to 50.8%

“…The proportion of U.S. banks tightening their terms on such loans for medium and large businesses rose to 50.8% in the second quarter, up from 46% in the first quarter, Bloomberg reported Monday (July 31), citing figures from a survey by the Federal Reserve Board.”

Key takeaways:

• Banks are continuing to tighten their terms on commercial and industrial loans
• The share of banks reporting weaker demand for commercial and industrial loans among large and midsize firms fell to 51.6%, down from 55.6% in the first quarter
• Banks are also looking to tighten standards through at least the rest of the year

LinkedIn Post

To Expand Credit Access to Small Businesses, Banks Must Tap Alternative Data

"...Chris Hendrickson, senior vice president of small business strategy at Comerica Bank, and Scott Steinberg, chief product officer and chief operating officer of Enigma, said a multidimensional underwriting process is needed to give a critical lifeline to companies seeking to navigate an uncertain macro environment — and to grow.”

Key takeaways:

• Hendrickson: “the tightening underscores the fact that speed and access to capital will remain very important for small businesses”
• alternative data sources that can help flesh out a fuller sense of creditworthiness might take payroll data, even industry or geographic-specific trends — data that is already in-house— into consideration

LinkedIn Post

X officially launches its Ads Revenue Sharing platform for content creators

"... In a bid to maintain its most influential users amid growing competition from platforms like Instagram Threads and others, X, formerly Twitter, introduced an initiative to compensate creators by sharing a portion of the ad revenue generated from replies to their posts earlier this month.”

Key takeaways:

• The company has officially launched its Ads Revenue Sharing platform
• With these promising strides towards empowering content creators, X aspires to foster a thriving community where talents can flourish and be duly rewarded for their contributions

LinkedIn Post

HSBC joins forces with Tradeshift to launch embedded finance business

"...Expected to launch in “early 2024” and backed by a two-stage $35 million investment from HSBC, the partnership will see the embedding of a variety of digital solutions, including payment and fintech services, into the trade, e-commerce and marketplace experiences provided by Tradeshift and other platforms.”

Key takeaways:

• The investment from HSBC also forms part of a wider funding round for Tradeshift, with the fintech expected to raise a minimum of $70 million from the bank and other investors
• Around 1.3 million businesses worldwide are currently supported by HSBC’s trade banking facility, which facilitates over $800 billion of trade flows every year

LinkedIn Post

Check this out:

Consultant Rob Chrisman and Curinos’ Richard Martin join the (F)insights podcast to discuss how mortgage lenders will react to the latest market contraction, the likely trajectory of origination margins, the impact of the mortgage availability index being at its lowest level since 2013 and more...

Listen: https://hubs.li/Q01Yw8R00

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