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Embedded Finance


#352
Fantasy Fintech

Published:

Sep 05, 2020


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Posted In:

Embedded Finance

Published:

Sep 05, 2020


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What if your car bought you coffee the next time you were at Starbucks? Or you could instantly buy the dress Mulan was wearing directly from your Apple TV? We have been fantasizing about moments like this for decades now - and finally, the underpinnings of these moments are here.

Embedded financial services are finally upon us - facilitating payments, lending, and insurance products, anywhere. This could be your car, on a clothing website, at an electrical outlet, or on a farm.

Shopify is a behemoth of embedded finance, with merchant services (read, financial services) revenue making up ~60% of total revenue. Instagram was quick to adapt to direct in-app purchases, rolling ou it’s checkout feature this summer. And just this past week, Drivers in Austin, TX are finally able to pay for parking directly from Google Maps.

Under the hood is the fintech infrastructure layer powering commerce, with J.P. Morgan pegging embedded payments at 10% penetration today. While we expect this to exponentially grow, our imagination of the potential use cases might seem like fantasy.

Portfolio News


The Fintech 250: The top fintech companies of 2020 - Congratulations to portfolio companies Anyfin, Flutterwave, Embroker, Ocrolus and Reonomy for making the third annual CB Insights Fintech 250 — a list of 250 of the top private fintech companies using technology to transform financial services. Read more

Olugbenga ("GB") Agboola, Zach Perret named to Fortune's 40 Under 40 for 2020 - Congratulations to portfolio company Flutterwave CEO Olugbenga ("GB") Agboola, and Plaid CEO Zach Perret for being named by Fortune as one of the 40 emerging leaders in finance. Fortune released its annual list of 40 influential people under the age of 40, highlighting people in each of five categories: Finance, technology, healthcare, government and politics, and media and entertainment. Read more

Fantasy Fintech


Goldman Sachs vies for GM’s credit card, betting you’ll buy coffee with your car - It is part of a broader effort to wire everyday gadgets to the web to encourage consumer purchases and gather data. This technology has been slow to take hold—not everyone needs a refrigerator that says when the milk is running low—but it taps into a broader trend of consumer spending becoming more seamless and digital. The coronavirus pandemic could add to the appeal by increasing demand for e-commerce and contactless pickup. Read more

Google quickly rolls out major new Google Maps update - The new feature, which comes from a partnership between Google and parking app Passport, lets users pay for parking directly in Google Maps as they approach their destination. Users can either pay via Google Pay or go to a payments site in their browser. Read more

Amazon debuts Alexa for property managers - Voice commerce has accelerated, with 90m voice-enabled devices in the U.S. Google and Amazon are betting that their hardware – Alexa for Amazon, and Home and Nest for Google – will be in the race for the $40b market. Read more

Industry News


Startup co-founded by ex-Goldman trader is first fintech to complete takeover of a national bank - The move by Jiko, which bills itself as a new kind of bank, gives it broad access to the highly-regulated U.S. market. Fintech firms have to choose one of three ways to break into this market: acquire a banking institution, apply to become a chartered bank, or partner with an existing lender. That U.S. regulators blessed the Jiko transaction is significant mostly because of how fundamentally different it is: It’s a consumer bank that doesn’t hold deposits. Read more

Mastercard, TSYS team to expand installment payment offerings - The deal allows Mastercard customers to split transactions into installments before, during or after checkout. It supplements Mastercard’s merchant offerings through API-based solutions, commercial partnerships and acquisitions, the company said. Read more

Total value locked in Defi jumped 85% in August, $8b in assets held - The defi lending platform Aave makes up 21.86% of that value. Another defi project that has been making waves is the Yearn Finance protocol and the native token YFI. Yearn Finance essentially lets users leverage a variety of defi applications like Curve, Aave, and Compound in order to maximize yield or lending schemes. Read more

Amazon's new offerings make India centre of fintech push - Amazon has added insurance and even gold to its menu of financial services in India, to expand its customer base and attract more subscribers to its Prime loyalty program in a battleground growth market. The push ramps up competition as fintech rivals and their deep-pocketed foreign backers struggle for profitability in a predominantly cash-based economy where about 190m adults do not have bank accounts. Read more

Wonder tool yETH promises to supercharge DeFi yields - yETH is a so-called “vault,” which means that users earn yields together. yETH automatically generates the highest interest or “yield” across DeFi protocols when users stake Ethereum holdings. Traders believe that demand could be huge, and may even create a "liquidity crisis" for Ethereum's token ETH. Read more

Fintech startups catering to small businesses are hurting, and that's creating hard-to-ignore opportunities for incumbents to make cheap acquisitions - Fintech lenders have built new, automated ways of assessing businesses and issuing loans, offering small businesses digital and more efficient ways to access funding than walking into a bank branch. That tech is appealing to incumbents, which have been slower to adopt new trends. Read more

Coinbase shuffles board ahead of rumored IPO - The future of Coinbase, including any IPO, is likely to be a bellwether for the crypto industry as a whole. While the industry has grown enormously—the value of Bitcoin in circulation is now worth over $200b—and made inroads into traditional finance, crypto has not entirely shaken its outlaw reputation. Read more

PayPal introduces interest-free buy-now-pay-later product - As online purchases increase and consumers look for more ways to save due to Covid-19, buy-now-pay-later has accelerated in popularity. Read more

DDoS cyberattacks have skyrocketed this year. Just ask the New Zealand stock exchange - On Monday, the operator of New Zealand’s stock exchange, NZX, suffered a massive cyberattack for a fifth consecutive trading day. Unlike the previous four incidents, however, NZX managed to maintain trading on its markets. Read more

Select Financings


Auxmoney - Germany based peer-to-peer loan marketplace raised €150m in new funding led by Centerbridge. Read more

Capchase - Boston based startup that helps SaaS companies get cash from accounts receivable raised $4.6m in Seed funding led by Caffeinated Capital, Bling Capital and SciFi VC. Read more

Neon Pagamentos - Brazil based digital bank raised $300m in Series C funding led by General Atlantic. Read more

Nubank - Brazil based challenger bank raised $300m in new equity funding from 5 undisclosed investors. Existing investors include TCV, Tencent, DST Global, Sequoia Capital, and Ribbit Capital. Read more

PasarPolis - Indonesia based insurtech startup raised $54m in Series B funding led by LeapFrog Investments and SBI Investment. Read more

PropertyGuru Group - Southeast Asia based online realty company raised $220.4m in new funding from its existing investors KKR and TPG Capital. Read more

Toss - South Korea based operator of peer-to-peer payment service raised $173m in Series G funding led by Sequoia Capital China. Read more

Zero Hash - Chicago based provider of an infrastructure to settle digital assets in an automated and regulated way raised $4.8m in Series C funding led by Tastytrade. Read more


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