October 25, 2022
Photo: OsakaWayne Studios via Getty Images
Good morning, and welcome to Protocol Fintech. This Tuesday: cashing in on rising savings rates, Marqeta’s push into banking tech, and Rostin Behnam’s disagreement with Gary Gensler.
Last week, we noted that Klarna’s Twitter bio was out of step with CEO Sebastian Siemiatkowski’s protestations that his company was “not BNPL.” Well, guess what? Klarna now says, “We make shopping smoooth.” Not so “smoooth” that we didn’t pick up on the update, though. Protocol gets results!— Owen Thomas (email | twitter)
Online banks are once again racing for savers’ cash. Over the course of the Federal Reserve’s seven-month campaign of rate hikes, a common complaint from lawmakers and consumers alike is that rates are going up for borrowing — mortgages, credit cards, personal loans — but not savings accounts.
That has changed quickly. Online banks led the charge in the second half of this year.
The thing is, most banks don’t want deposits they can’t productively lend. And both online banks and traditional banks alike were awash with deposits during the pandemic as spending slowed and government stimulus padded bank accounts. Those same factors caused lending to decrease, leaving banks with excess deposits.
Banking customers and their deposits tend to be pretty sticky, however. A January survey by Bankrate found the average American has held onto the same savings account for nearly 17 years, with convenience among the top reasons why.
But even a small group of customers shifting to an online bank can make a difference for that company, Shevlin added. Time will tell if the current gap in rates between online banks and brick-and-mortar is enough to convince customers to make the switch. That will be worth watching as LendingClub and SoFi — both fintech lenders-turned-chartered online banks — report earnings in the next two weeks.
— Ryan Deffenbaugh (email | twitter)A version of this story first appeared on Protocol.com. Read it here.
The news is out! Join the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance, produced in partnership with Protocol. Taking place in Washington, D.C., on November 16th, the Summit will examine the most pressing issues in fintech.
On Protocol: Square sells access to your inbox, and no one seems to know if the law cares.
Fintech is losing its share of the venture capital market. Fintech investments made up 22% of the venture market in the third quarter of 2021. In the same period this year, that figure fell to 17%.
Also on Protocol: Marqeta is rolling out seven new tools to help businesses offer banking services, a significant expansion beyond its core business of issuing cards.
Amazon is adding Venmo to its checkout. The PayPal-owned payment service will begin rolling out in the Amazon app and on Amazon.com starting today.
Mortgages sold to Fannie Mae and Freddie Mac need to use more than FICO. The Federal Housing Finance Agency will require lenders that use credit scores for mortgage underwriting to use scores from both Fair Isaac Corp. and its competitor VantageScore Solutions.
Also, also on Protocol:Chainalysis’ Michael Gronager talks about knowing your crypto customers.
PayPal wants a smoother log-in process.The payments giant said it’s added passkeys as a log-in method, allowing iPhone, iPad, and Mac users to sign in without a password.
CFTC chairman Rostin Behnam seems to be getting more outspoken about his disagreements with his counterpart at the SEC. “Ether, I’ve suggested that it’s a commodity, ” he said at Rutgers Law School’s Regulating Financial Innovation symposium Monday. “Chairman [Gary] Gensler thinks otherwise — or at least hasn’t certainly declared one or the other.” Gensler has drawn attention recently to Ethereum’s shift to staking and its securities-like yield.
New York rent-to-own company Landis raised $40 million in a series B round. GV led with participation from Sequoia Capital, Operator Partners, Second Century Ventures, Signia Ventures, and Team Builder Ventures. The company aims to help renters transition to homeownership.
Fabric Systems, a startup that aims to make bitcoin mining more green with energy-efficient hardware, received $13 million in seed funding. Metaplanet, Blockchain.com, and 8090 Partners invested in the round.
Paytrix raised $5.6 million in a pre-seed growth round led by Hambro Perks. Bain Capital Ventures,
Small business banking company NorthOne raised $67 million in a series B round. Battery Ventures, Don Griffith, Drew Brees, Ferst Capital Partners, Redpoint Ventures, and several other firms participated in the round, which the company told TechCrunch was an “up round.”
TomoCredit raised a $7 million seed round with participation from South Korean consumer bank subsidiary KB Investment Inc., Barclays, Knollwood Investment Advisory, Ulu Ventures, Strong Ventures, and Passport Capital. The company provides a credit card designed to help users build credit.Bookkeep raised $6.6 million in a seed round led by Fin Capital. TTV Capital, Argonautic Ventures, Lerer Hippeau, Haymaker Ventures, and several other firms invested in the accounting automation startup.
At the #FTAFintechSummit, we’re gathering the most important players in fintech, from founders to policy experts, regulators, and industry leaders. You’ll get access to discussions on the fintech transformations driving competition, breaking down barriers to financial services, and shaping the future of finance.
Thanks for reading — see you tomorrow!