Two Steps Forward, One Step Back


Oct 03, 2020



Oct 03, 2020



Two U.S. banks made huge strides in gender diversity - Citigroup’s new CEO Jane Fraser is the first woman to run a major financial institution in the US, and at Goldman Sachs, Stephanie Cohen has been promoted to lead the bank’s Consumer and Wealth Management Division.

Despite the progress, banks are still battling a slew of scandals. JP Morgan was fined a record $920m for “spoofing” (read: market rigging) in commodity markets and Treasury bonds. Spoofing occurs when a trader (in this case, 15 traders over eight years) enters a series of fake orders that he/she has no intention of filling, to fool the “algos” about the demand in the market.

Leaked FinCen (Financial Crimes Enforcement Network) data also revealed thousands of “suspicious activity reports”, with one New York regulator acknowledging that the financial system is “awash with trillions of dollars in dirty money.”

The four largest U.S. banks spent a combined $38b on technology in 2019. However, despite the industry’s massive tech investment, it still can’t seem to stop rogue behavior, money laundering, their systems crashing (read: Morgan Stanley’s Shareworks platform) or even wiring $900m to the wrong people as Citi recently did.

If Biden wins the election on Nov 3rd, maybe his leaked pick for Treasury Secretary, Dr. Lael Brainard, will ask the remaining boys in the industry to buy some #properfintech and fix the problem?

Portfolio News

Significant shift from cash to digital payments a gradual process, say Flutterwave executives - In less than five years of existence, portfolio company Flutterwave, founded by a team of ex-bankers, entrepreneurs, and engineers, has carved a niche for itself in Africa’s fast rising fintech sector. The company’s executives fielded questions from Business A.M.’s Saviour Adugba on the fintech state of play in a time of COVID-19, and how Flutterwave has navigated itself during this time. Read more

Two Steps Forward, One Step Back

Dirty money has ‘metastasized’ within global banking system, top regulator says - The FinCEN Files revealed that big banks often OK’d transfers of suspicious money but didn’t report these transactions to regulators until months or years later — after the money was long gone. New York’s financial regulator acknowledged that the financial system is “awash with trillions of dollars in dirty money,” and has called on banks to help fix it. Read more

JPMorgan is set to pay $1b in record spoofing penalty - Spoofing typically involves flooding derivatives markets with orders that traders don’t intend to execute to trick others into moving prices in a desired direction. The practice has become a focus for prosecutors and regulators in recent years after lawmakers specifically prohibited it in 2010. Read more

Palantir insiders struggled to sell shares at debut because they couldn’t access trading platform - Palantir shares opened at $10 on the New York Stock Exchange. Existing investors are allowed to sell up to 20% of their shares before the lockup expires, but several former workers said that they and some current employees couldn’t get into Morgan Stanley’s Shareworks system. Read more

Citi cleared to seek information in $900m-error suit - Citigroup says an employee error caused it to send more than $900m of its own money to a group of lenders expecting an interest payment on behalf of Revlon. The bank last month sued 11 investment managers for the Revlon creditors that are trying to hold on to the money as payment of Revlon’s debt to them. Read more

Industry News

ECB takes major step toward introducing a digital Euro - A central-bank digital currency would allow euro-area residents to place deposits with the ECB directly. That’s typically only an option for commercial lenders, governments and other central banks. That has implications for monetary policy and financial stability. Read more

Amazon will now let you pay with your palm in its stores - Amazon accounts for nearly 40 percent of e-commerce sales in the US today, and it takes a cut of even more online shopping by selling payments services and other technologies to external shopping sites. Now, the online retail giant is making a play to grab a piece of brick-and-mortar shopping, too — and it wants customers to literally lend a hand to do it. Read more

The first blank-check ETF makes its trading debut - Concerns remain over whether the SPAC market is large enough to support an ETF portfolio, even after a record-breaking year that has seen over $41 billion raised so far. SPAK seeks to counter that worry by weighting its holdings according to market value. That will give extra exposure to shares of SPACs that have surged after they bought a private company, effectively taking it public. Read more

Giant cryptocurrency exchange BitMEX hit with criminal and civil money laundering charges - The CFTC alleges that much of BitMEX’s trading volume and profits are from U.S. customers, despite the fact that, like many other international cryptocurrency exchanges, Americans cannot legally use it. Visitors to the exchange’s website from American IP addresses receive a warning to that effect and are blocked from registering. Read more

Square adopts QR codes to bring self-serve ordering to restaurants - Square has introduced a self-serve ordering feature for restaurants that allows dine-in customers to order and pay for food through their phones, reducing physical contact with staff. Read more

Banker walks free from insider trading charge after deleting WhatsApp - Konstantin Vishnyak did one thing before he handed the second of his two iPhones to the police officer arresting him: he deleted Whatsapp. Two years later, a London jury acquitted him of destroying documents that he knew would be crucial to an investigation into his trading activity. Read more

Why the SPAC mania won’t bridge the Atlantic - The London Stock Exchange boasts that 30 SPACs have been listed in London in the past 5 years. More than $2b has been raised since 2017. But British backers are nursing the scars from a long line of blank cheque duds. Read more

Ant’s huge lending business powers $30b IPO - Ant’s consumer lending business is made up of two products: Huabei (similar to a traditional credit card), and Jiebei (small unsecured loans). Users say they are funnelled towards these two products with discounts and offers, and sometimes Alipay uses Huabei to pay by default, even if they do not intend to use credit. Read more

Failure to pay invoices on time puts recovery at risk - Answer to small businesses’ struggle for payment across the world lies in a mix of fintech and regulation. As one small business owner says “There are some high-street retailers who will pay you on 75-day terms with a 2.5 percent haircut if you want it earlier. I am staggered this is still allowed. I thought highway robbery was outlawed”. Read more

Swift launches project for “brilliantly simple” SME cross-border payments - The network says it is working with more than 20 banks on the new project. It says SMEs will benefit from predictable payments, upfront costs and processing times, and real-time status updates. A single format is used for easier straight through processing, while banks “unilaterally” agree processing fees. Read more

Banks push back on possible banking charters for big techs like Amazon and Facebook - Overseen by the Office of the Comptroller of the Currency (OCC), the charter would allow firms like Facebook, Google or Amazon to bypass the process by which they need to collect money transmitter licenses state by state. It would instead offer payment companies a national servicing platform to replace the regime of state regulations such firms would be subject to under existing laws. Read more

Ant Group launches its virtual bank ahead of its IPO - Ant Bank was one of the 8 recipients of the virtual banking license by the Hong Kong Monetary Authority (HKMA), this launch makes it the 6th virtual bank to launch their services in Hong Kong. Ant Bank will partner with AlipayHK to enable the integration of banking services into consumer’s daily life to make them accessible to anyone at anytime and anywhere. Read more

Goldman Sachs to buy GM credit card business for $2.5b - GS is buying General Motors’ credit card business, according to people familiar with the matter, marking the bank’s second big-name credit-card partnership and another step towards balancing its operations with heft in consumer finance. Read more

Mastercard partners with Samsung, Airtel and Asante to drive digital inclusion in Africa - The pay-on-demand platform enables safe, secure & convenient consumer financing via Samsung devices with embedded Knox security platform, through Airtel Africa’s network. Read more

Crowdfunding in Colombia on the rise thanks to more flexible regulations - Two years after Colombia released its first regulations for crowdfunding, the country has hardly any fintechs in this niche, but that is set to change after the latest regulatory update. Read more

Silicon Valley listings rip up the rule book - US companies are taking greater control over their stock market debuts by turning to direct listings, new technologies and Spacs. Taken together, these changes form a new playbook for companies, promising executives a greater say in the exercise while dimming the role of investment banks. Read more

Select Financings

Alkami - Texas based digital banking technology vendor raised $140m in new funding led by D1 Capital Partners. Read more

Attunely - Seattle based platform for payments collection raised $6m in Series A funding from Framework Venture Partners, Anthos Capital, and Vulcan Capital. Read more

Bitpanda - Vienna based investment and trading platform for cryptocurrencies raised $52m in Series A funding led by Valar Ventures. Read more

Capitalize - New York based platform for locating and transferring legacy 401(k) assets raised $2m in Seed funding led by Bling Capital. Read more

Facet Wealth - Baltimore based provider of financial and wealth management services intended to demystify and simplify financial planning process raised $25m in Series B funding led by Warburg Pincus. Read more

Noyo - San Francisco based API platform for health insurance data exchange raised $12.5m in Series A funding led by Costanoa Ventures and Spark Capital. Read more

OneDome - U.K. based platform for buying property, getting mortgages, and handling the legalities raised £5m in Series A funding from Lord Jacob Rothschild, Reuben Brothers Capital, and Clark Winslow. Read more

Pacaso - San Francisco based company for second home ownership launched by Zillow co-founder and former CEO Spencer Rascoff raised $17m in Series A funding led by Maveron. Read more

PayCargo - Florida based payments network for the global shipping industry raised $35m in Series A funding led by Insight Partners. Read more

PayMongo - Philippines based online payments API raised $12m in Series A funding led by Stripe. Read more

Rally - New York based fractional investing platform for alternatives investments such as luxury cars raised $17m in new funding from investors including Upfront Ventures, Porsche Ventures, Raptor Group, Global Brain, Relay Ventures and Alexis Ohanian. Read more

Retirable - New York based company simplifying the retirement process with a personalized, digital plan from Certified Financial Planners (CFPs) raised $4.7m in Seed funding led by Vestigo Ventures. Read more

Yotta Savings - New York based startup incentivizing people to save money with prize drawings raised $3.3m in Seed funding from a group of investors including FundersClub, Slow Ventures, TwentyTwo VC, Chapter One, CapitalX and Y Combinator. Read more


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