What’s Up In Fintech
On Thursdays, I share news stories and trending pieces I’m keeping tabs on. Consider it your shortcut to shifting through the noise in the fintech news world.
#1 Fewer Americans Report Feeling Financially Included
In other words, more Americans report feeling financially excluded. Research published Tuesday reveals that the United States has experienced a slip in its financial inclusion ranking. According to the second annual Global Financial Inclusion Index, compiled by the Centre for Economics and Business Research and Principal Financial Group, the U.S. has fallen second to fourth in the global rankings.
What exactly is financial inclusion? I talk about it a ton in this newsletter. It just means ensuring that individuals and businesses have access to valuable and affordable financial products. We’re talking credit access, ensuring borrowers and lenders are treated right, having the latest fintech gadgets at your disposal, and not jumping through hoops for capital.
The index breaks this down into three key pillars: government, financial system, and employers. Many of the world’s heavyweight economies are stuck in a rut or even sliding down the slope when it comes to financial inclusion.
On the brighter side, Singapore is still the reigning champ in the financial inclusion game, acing the charts in government, employer, and economic system support. Right on their heels are Hong Kong and Switzerland.
Why It Matters:
So, why should we care about this whole financial inclusion thing? Well, it’s not just about money in the bank; it’s about society moving forward. When a country’s financial inclusion game is strong, it’s usually a sign that things look good on other fronts, like less corruption and more economic freedom.
In the U.S., though, people feel meh about the government’s role in all this. The number of folks who think Uncle Sam is helping them financially went from a solid 72% in 2022 to a less enthusiastic 50% in 2023.
Oh, and here’s another twist: support from employers, a big player in the financial stability game, has dropped across the board. Smaller businesses, in particular, are feeling the squeeze. That’s where fintech comes in, especially for the SMB market.
However, it’s not all bleak for the U.S., which maintains its top ranking in financial system support, excelling in areas like access to credit and fintech presence.
There’s a silver lining on a global scale: financial inclusion is on the rise, thanks to Southeast Asia and Latin America leading the charge.
#2 Swedish A2A Payments Startup Bags $60 Million
Female-led Brite Payments, a standout Swedish fintech that’s been making waves in open banking, just made a major splash with a $60 million funding round announcement. This is no small feat, especially considering that global fintech investments took a 48% dip in the second quarter of this year, and female-founded companies secured less than 2% of funds.
Let’s dive into why this is such a significant development, particularly in the payments sector, which is essentially the backbone of fintech and has proven remarkably resilient during these turbulent times. Brite Payments, founded in 2019 by Lena Hackelöer, embodies this trend.
But what’s the story behind Brite Payments? It’s all about account-to-account (A2A) payment solutions, riding the wave of open banking possibilities. Drawing from her stint at Klarna, Lena saw the potential in A2A payments and leaped.
Today, Brite Payments is one of Sweden’s fastest-growing fintech gems, doubling its revenue and transaction volume in 2022 while achieving profitability. They now have a footprint in 25 European countries, connecting to 3,800 banks serving over 350 million customers.
The secret sauce to their success? Making A2A payments as accessible as a cakewalk for businesses and customers. These payments have been instrumental in the fintech world’s evolution, mainly through ACH (Automated Clearing House).
Think of investment apps like Robinhood, peer-to-peer payment apps like Venmo, and crypto trading platforms like Coinbase – they all heavily rely on easy and cost-effective A2A payments.
Why It Matters:
In the modern fintech landscape, customers signing up for apps expect instant fund transfers from their bank accounts, a far cry from the old days of voided checks or microdeposits. This instant connectivity has been pivotal for payments and secure account data access, which is crucial for personal financial and wealth management.
Now, consider the colossal savings potential A2A payments offer. While merchants currently lean on card networks like Visa and Mastercard, it comes at a price. Processing a $100 credit card purchase costs a merchant around $3, compared to a mere $0.60 with ACH.
Scaling up ACH usage could result in massive savings over time for businesses, even the size of retail giants like Walmart, Amazon, and Starbucks, where the potential savings could soar into the hundreds of millions, if not billions, of dollars.
Adding to Brite Payments’ allure is its steadfast commitment to diversity. Not only is it female-founded, but its team boasts more than 25 nationalities, providing a rich tapestry of perspectives as they expand into diverse European markets.
With this newfound financial boost, Brite Payments is gearing up for an exhilarating expansion journey. Their roadmap includes fortifying their presence in existing markets and venturing beyond the Eurozone. They’re betting on the user-friendly nature and financial dependability of A2A payments to drive a Brite-powered economic transformation.
So, keep an eye on Brite Payments and the open banking startups cropping up not only in the U.S. but across the globe.
#3 Visa To Invest $100 Million In Generative AI Companies
Visa dropped big news this week that’s got everyone talking – they’re rolling out a whopping $100 million fund dedicated to backing generative artificial intelligence (AI) startups. This isn’t your run-of-the-mill investment move; it’s a game-changer in Visa’s quest to stay on the cutting edge of tech, especially when making payments more innovative and personalized.
Let’s break it down. Generative AI is like the magic behind the scenes, powered by big language models, making original stuff like text and images. Lately, we’ve seen a bunch of cash flowing into the world of generative AI, with a significant focus on jazzing up how we make payments, making it all super personalized for us regular folks and the folks running shops.
But here’s the kicker: the possibilities go way beyond payments. Generative AI could shake up how we do financial services, shop, market, and manage risks – you name it.
Why It Matters:
These guys have a goldmine of data, especially in the payments department. Think about it – they know about transactions that most of us can’t imagine. This data is rocket fuel for building brilliant large language models tailor-made to tackle payment problems head-on.
Plus, Visa’s got a bunch of cool stuff going on, like their accelerator program, global Visa Everywhere gig, and the Fintech Partner Connect thing, where they hook up fintech rockstars with banks and big players.
Here’s the fun part: most of the groundbreaking tech action happens with startups. Visa’s got this enormous pool of startup talent to team up with and turbocharge the generative AI scene. This move doesn’t just add weight to the generative AI buzz; it’s like Visa’s throwing its hat in the ring, saying, “Hey, we’re here to shake things up!”
As TechCrunch shared, Visa is keeping it real by looking to invest in startups that are rolling up their sleeves to tackle real-life problems in commerce, payments, and fintech with the power of GenAI. This is more than just a big investment; it’s Visa potentially paving the way for a whole new world of financial services.
MARK YOUR CALENDARS
A Week In The Life
Tune in every Thursday to keep in the loop on the best fintech events happening each week! Whether it’s an online meetup or a fintech conference, these gatherings provide amazing opportunities to network, learn and connect with our incredible fintech community.
So, let’s fill up those calendars with all the awesome events out there – I’d love to see you at one, or even better, if you have one you’d like to share, please let me know!
- [VIRTUAL] Practical approaches to finding career fulfillment in fintech: Feeling stagnant or in a rut in your career? Carve some time for yourself and check out this recording of my virtual event where I talk through the key steps you need to take to find fulfillment in this fintech world. I even brought in career guru Ashely Artip to help us out. Bring a pen and get ready to take notes – I’ve got homework for you.
- [NYC] The CEO Breakfast Series: Hosted by friends at Rise by Barclays, this one is strictly a Founder/CEOs only roundtable to connect and empower fintech founders to connect with peers in a closed door and honest environment on topics like fundraising, cap table/board management, and scaling your team.
- [VIRTUAL] Unlocking Security: Biometrics vs. Fraud: The average fintech company loses $51 million annually to fraud. Join me and Frances Zelazny for an in-depth discussion on fraud in fintech and how the world of biometrics plays a powerful role in reducing fraud across the industry. Everyone needs to know this stuff!
- [BOSTON] Boston FinTech Week presented by Fintech Sandbox, is a collaboration between Fintech Sandbox and the broader fintech ecosystem and startup community. What started as a grassroots gathering has grown into a full week each year when the global fintech community gathers in Boston.
HUMANS OF FINTECH
Throwing it back to this conversation with industry powerhouse and Stash CEO Liza Landsman. Earlier this year, Liza joined me live in the studio to talk about how she’s using fintech to disrupt the bottleneck between economic sustainability and the average consumer.
Liza unpacks how the average consumer can benefit from Fintech and why, by using less coded, more accessible language, apps like Stash are breaking down barriers and encouraging those in poverty to achieve financial stability.
Plus, we chat about the importance of representation in the fintech sector and the psychology behind getting people to save more and buy less. Get to know Liza, here.