The Big Story

Visa's Plan B

Visa's not giving up that easily.

Five months after its $5.3 billion bid to buy Plaid collapsed, the payments giant is making another bold acquisition in a critical area. Visa's $2.2 billion purchase of Swedish banking-tech startup Tink underlines that it's determined to expand its tech arsenal to take on the fast-growing trend of open banking.

Tink's data access technology is the draw for Visa. Buying Tink would help Visa become a stronger competitor with technology that provides banks and fintechs easier and broader access to consumer financial data.

• The merger would combine Visa's "network of networks" with the Swedish startup's "open banking capabilities," Visa CEO Al Kelly said.
• Founded in 2012 by Swedish entrepreneurs Daniel Kjellén and Fredrik Hedberg, Tink has grown rapidly in Europe, where its API connects to more than 3,400 banks and institutions and more than 250 million of their customers.
• The company has also attracted major investors, including PayPal, BNP Paribas and ABN AMRO. Tink has also forged key partnerships with major financial services players, including PayPal and American Express.

Visa wants to defend itself against disruptors. Cutting-edge data-access technology has become an important capability in the battle over open banking where Visa is up against longtime rivals, led by Mastercard, and smaller, nimbler, faster-moving startups.

• Visa had hoped to gain new tech capabilities when it tried to buy Plaid. But the Justice Department derailed that plan when it opposed the deal, calling it anti-competitive.
• The quest for state-of-the-art open-banking technology also led Mastercard to buy Finicity for $825 million last year.
• Clearly, the two financial services giants feel threatened by the rise of new technologies that are dramatically changing the way the industry operates. That's why they have been "very proactive in finding seats at any table where they might be disrupted," Jonah Crane, a partner at Klaros Group, told Protocol.

Will Visa get a break from regulators this time? Crane thinks the company may be "less vulnerable to antitrust scrutiny" in Europe where it could find "an easier regulatory path." One thing that could help would be Kelly sticking to platitudes about innovation. The DOJ cited his characterization of the Plaid deal as an "insurance policy" meant to remove a "threat to our U.S. debit business" in suing to block the merger.

— Ben Pimentel

A MESSAGE FROM MICRON

Recently, Micron announced new memory and storage innovations across its portfolio based on its industry-leading 176-layer NAND and 1α (1-alpha) DRAM technology. But what does "1α" mean, and just how amazing is it?

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From Protocol | Fintech

The House shot down "true lender" rule. Lawmakers voted to repeal the controversial OCC rule regarding how nonbank fintechs can partner with banks, following the Senate's lead.

Robinhood is calling for sub-penny pricing. The online broker jumped into the debate on pricing and execution, saying that letting exchanges quote ever-smaller fractional prices, as market makers can in off-exchange trades, would "level the playing field."

Andreessen Horowitz's crypto bets are growing. The venture capital fund raised another $2.2 billion for a third crypto fund.

El Salvador's bitcoin plan hit a snag. The Central American nation's bitcoin partner doesn't have the necessary money transmitter licenses required in most U.S. states.

Overheard

• "It is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes. Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint." —The Bank for International Settlements, a global group for central banks, in a new report.
• "More than a month after the May 19 crypto crash, bitcoin funds continue to bleed. Institutional investors, who tend to invest via regulated vehicles such as publicly listed bitcoin funds or CME Bitcoin futures, still exhibit little appetite to buy the bitcoin dip." —J.P. Morgan strategist Nikolaos Panigirtzoglou.
• "A lot of investors don't have a bet on Europe. Mollie's one of those unique assets that offers exposure." —Shane Happach, CEO of Dutch payments company Mollie, which was just valued at $6.5 billion.

Need to Know

• Credit Suisse's new chairman bruised some bankers' egos. Antonio Horta-Osorio said the bank had a great wealth management business "with ancillary services," per Bloomberg. Investment bankers there felt dissed.
• Cross River Bank bought PeerIQ. The bank's parent company acquired the data and risk analytics company. It bought fintech Seed in 2019.
• Six big banks backed SWIFT's international payments platform. Citi, Bank of New York Mellon, Deutsche Bank, BNP Paribas, Standard Chartered and Bank of China are joining the platform, which is slated to launch in November 2022.
• Virtu joined DeFi network Pyth. The big market maker is joining Jump Trading and GTS on the platform, which provides instant prices on stocks, currencies and crypto.

Making Moves

• Fiserv is building up its executive team. Guy Chiarello, Fiserv's chief administrative officer, has been named COO. Suzan Kereere is joining Fiserv as chief growth officer, a new position, from Visa, where she was global head of merchant sales and acquiring. Adam Rosman is rejoining Fiserv as chief administrative officer and chief legal officer. He comes from personal installment loan company OneMain Financial.
• Zahir Khoja was named North America general manager for Afterpay. He joins the "buy now, pay later" company from Mastercard, where he was executive vice president of global merchant solutions and partnerships.
• Discover Financial hired Alexandra Prodromos. She was executive director of the Chicago Blockchain Center. She'll be a product manager for blockchain and digital currency.
• MoneyLion added directors ahead of its SPAC deal. The finance app named Annette Nazareth of Davis Polk & Wardwell and Dwight Bush Sr., CEO of DL Bush & Associates and former ambassador to Morocco under Obama, to its board.

Deal Flow

• Viva Republica is now worth $7.4 billion. The South Korean developer of fintech app Toss raised $410 million.
• Chainalysis is valued at $4.2 billion. The crypto data sleuthing startup raised $100 million, after just raising $100 million in November.
• Lower raised $100 million. The home financing startup's series A was led by Accel.
• Sealed raised $16 million. The startup finances homes to be more energy-efficient to address climate change.

3 Questions With...

Dan Snyder, CEO, Lower

What are you most excited about in fintech?

Accessibility. Companies are taking intimidating, daunting processes, and making them consumer-friendly and easy to use. It's connecting people all over the world in seconds and giving businesses opportunities to grow that weren't there just a few years ago. Now, you can trade stocks, open a bank account or get a mortgage with a click of a button — and understand what you're doing in a way that used to be a mystery. The fintech world is really challenging the traditional veiled tactics of 100-year-old banks, and it's not hard to see why consumers are flocking to these new avenues for their needs.

What in fintech do you think needs to be fixed?

While the near-instantaneous connection is my favorite thing in fintech, the complete removal of human interaction needs to be examined in some cases. My partners and I believe in making each touchpoint with consumers the best it can be, and sometimes that means keeping human interaction intact. Situations like digging into why a borrower may not qualify for a mortgage or loan or solving an issue with a product or service can't be completely replaced by AI. Plus, consumers appreciate the personalized service in those cases and are more likely to remember the interaction and recommend or come back to your company.

What fintech trend are you most worried about?

This doesn't just affect fintech, but keeping cybersecurity up to date as it relates to transacting online. We're collecting a lot of personal data, and as fintech becomes more widely used, our users become targets. Some may be using these tools for the first time ever and fall victim to scams simply because they don't know what's legitimate or not. Or companies may become lax or complacent in their security measures. So I think it's a two-pronged approach where we're educating our users and staying diligent with a proactive approach on our own security measures. It's vital to the credibility of our world that we take this seriously and protect our users.

A MESSAGE FROM MICRON

Recently, Micron announced new memory and storage innovations across its portfolio based on its industry-leading 176-layer NAND and 1α (1-alpha) DRAM technology. But what does "1α" mean, and just how amazing is it?

Learn more

Data Point

68.1%

That's the percent of mortgages originated with nonbank mortgage lenders in 2020, up from 58.9% — the highest nonbank market share on record.