A lot of interesting stuff has been announced recently, so let’s catch up on all the fintech news!
#1: Intuit Kills Mint
What happened?
Mint, an OG fintech product and one that I personally have a lot of affection for, is being shuttered:
Intuit Inc. is winding down personal-finance app Mint, and pushing users to shift to Credit Karma, a similar service that the company acquired in 2020.
Mint will no longer be available at the start of 2024, the company said Tuesday. Popular features to track personal spending and income are offered on Credit Karma, where users are invited “to continue their financial journey,” Intuit said.
So what?
This is a sad development. Mint was one of the first B2C products that really succeeded in showing consumers what fintech was capable of. I will always remember the feeling I had, as a user, when I connected my accounts and watched the data start to populate in the app.
Now it’s dead.
Not terribly surprising when you consider that despite its 3.6 million users, the product never really made money for Intuit.
What is surprising is that Intuit is killing Mint and encouraging those 3 million users to move over to Credit Karma, even though Credit Karma doesn’t support budgeting!
Mint users are not amused with this suggestion.
And so many of them are flocking to other PFM apps like Monarch, Copilot, and YNAB.
What does this mean for the future of PFM?
I’m not sure. As I have written and podcasted about previously, I don’t think there’s a single PFM solution that works for everyone. Mint probably got the closest to building one, but it could never figure out the monetization piece (read this article for some good background on that).
I hope that, post Mint, we’ll see a more diverse and vibrant ecosystem of different PFM solutions figure out how to thrive.
#2: What Right Do You Have to Win?
What happened?
Expensify, a company that I had thought of as a sober and responsible business expense management software provider, decided to cannonball into the deep end:
Expensify announced its foray into personal payments today, with functionality that allows anyone to send and receive money, split bills between individuals and groups, and chat, all within the New Expensify app.
“Expensify is now the financial superapp for your work and personal life, all based atop chat,” says David Barrett, founder and CEO of Expensify. “It’s a consumer-grade lovechild between WhatsApp, Venmo, and Splitwise, that scales seamlessly up to enterprise-grade receipt scanning, expense reports, and corporate cards.”
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So what?
This is one of the most amazing press release sentences in the history of fintech, so we’re just going to repeat it here for posterity’s sake:
“It’s a consumer-grade lovechild between WhatsApp, Venmo, and Splitwise, that scales seamlessly up to enterprise-grade receipt scanning, expense reports, and corporate cards.”
Describing a financial super app as a lovechild of multiple other financial apps is absolutely incredible. I have no notes on that!
On the product itself? I have notes!
- Do consumers want to use the same app for business expense management and their personal P2P payments use cases? I don’t, and I struggle to see why anyone would. I’ve made this point several times in the newsletter recently, but it bears repeating – P2P payments is a solved problem for consumers. We already have more than enough apps to choose from. If you’re going to introduce a new one, you need to give me a compelling reason to use it. This isn’t it.
- If the goal here is to expand Expensify’s addressable market by going down from small businesses to individuals (and it appears that Expensify’s consumer product uses a freemium pricing model like the business version does), how will it acquire consumers? B2C is a competitive space. What’s the GTM strategy? What right does Expensify have to win in B2C?
- Expensify’s core product strength is automated receipt scanning. This feature works really well for business users (I am a happy user of it!), but, like, isn’t it a bit weird to submit receipts for reimbursement to your friend after going out to dinner? Is there some type of case management functionality that allows that friend to challenge the receipt (I said no alcohol, Dave!)?
Generally speaking, if you describe your product strategy by invoking the term ‘super app,’ I will assume you have no idea what you’re doing. This mental shortcut worked for me with PayPal, and I have a hunch it’ll continue to serve me well.
#3: Bad Timing!
What happened?
Ferrari, which I hear makes a nice car, is introducing a new way for customers to pay:
Ferrari will start accepting cryptocurrency as a payment method in the U.S., with a view to extending the scheme to Europe.
The Maranello, Italy-based luxury sports car manufacturer is responding to demand from its wealthy customers, Chief Marketing and Commercial Officer Enrico Galliera said in an interview with Reuters.
“Some of our clients are young investors who have built their fortunes around cryptocurrencies,” Galliera said. “Some others are more traditional investors, who want to diversify their portfolios.”
So what?
The date for this story from CoinDesk is October 16th, 2023, in case you were wondering if I had accidentally stumbled upon a 2021 news story and mistaken it for a recent headline.
Nope! This is real.
I’m not sure I’ve ever seen a brand mistime the market so badly.
This was 2021:
And this is 2023:
(Editor’s Note – SBF was just found guilty on all charges as I was finalizing this newsletter. Seems like a good decision!)
Come on, Ferrari!
#4: Lending is Profitable! We Should Enable It!
What happened?
It’s now really easy for anyone to launch a lending product, apparently.
Marqeta … today introduced its new credit card issuing platform, adding intuitive credit card program management tools and creating a one-stop shop for launching consumer and commercial credit programs. With this launch, brands can create a new standard for credit cards that encourage greater customer loyalty with personalized rewards, completely owning the experience for their customers from end-to-end.
Highnote is proud to announce the expansion of our industry-leading debit, prepaid, and fleet issuing card platform to power consumer credit card products. Designed and developed by Highnote’s world-class payments veterans, the expanded platform offers a comprehensive range of credit capabilities – from technology that facilitates underwriting, repayment and loan servicing to full credit program management.
Unit:
Building a lending program has traditionally been extremely costly and complex. Procuring capital is expensive and time consuming, possible only for the largest companies who were willing to raise debt facilities. Companies would also need to hire teams and create tools for underwriting, origination, servicing, collections, and the orchestrations required to make decisions, deliver funds, and get repaid.
Unit is now making it even easier for companies to offer lending and financing products and get to market faster. Now, companies can launch fully-featured lending and financing products without needing to have the capital, understand the jargon, add headcount, or build a stack of technology solutions.
We’re excited to announce that Lithic is expanding our support of credit programs with our first fullstack credit product – Lithic’s Commercial Charge Card.
Not every charge card program is made equal. At Lithic, we designed Charge Cards to be flexible by combining our best-in-breed Card, Accounts, and ACH platforms but leaving space for customers to mix-and-match. Depending on what you’re building, we can provide an out-of-the-box solution where Lithic brings the sponsor bank as the lender of record (LOR), or you can bring your own.
Galileo Financial Technologies … today launched the Galileo Corporate Credit solution to help businesses modernize expense management. Traditionally, managing thousands of employee charge cards and their individual credit limits has been a complex and time-consuming task for companies. The Galileo Corporate Credit solution simplifies this process by introducing a central account with a single credit limit for fintechs and non-financial brands to facilitate a streamlined billing cycle and enable corporate-level repayments.
So what?
Apparently, I missed the memo that was sent to every fintech infrastructure provider that explained how companies in financial services actually make money.
The secret is out!
Lending is super profitable when done well. Enabling your customers to do something that can be super profitable for them seems like a smart business strategy!
The question is, where do you focus?
Is it better to support businesses, consumers, or both? Should you focus on capital-light lending products (like charge cards) or capital-intensive products (like personal loans)? How deep in the lending stack should you go? Are you going to help customers with underwriting? Compliance? Servicing and collections? Are you going to try to sell this to non-finance brands (which need a lot of handholding), fintech startups (which want light, developer-friendly capabilities), or mature fintech companies and banks (which need robust, enterprise-grade solutions)?
Galileo, Lithic, Unit, Highnote, and Marqeta all seem to have slightly different answers to these questions. I’ll be curious to see how things play out!
#5: Refunds-as-a-Service
What happened?
A new fintech infrastructure company emerged from stealth:
TodayPay Inc. emerged from stealth mode today at Money 20/20 in Las Vegas, to unveil the world’s first faster payment technology solution helping merchants offer their customers instant refunds in multiple payment choices.
So what?
I always like it when a fintech company attacks an area of finance or commerce that has been ignored, and refunds certainly qualify.
In 2022, retail sales in the U.S. reached $7.1 trillion, and approximately one-fifth of everything bought in the U.S. is returned every year. That’s a lot of money! And because the rules for most payments rails tend to favor the consumer over the merchant, returns and disputes are quite painful and expensive for merchants. They’re also overrun by fraudsters. According to the National Retailers Federation, return fraud is now estimated to cost 10.7% per transaction.
So, I’m definitely intrigued by the idea of building a new solution in this area.
However, it’s not exactly clear to me how it works. This article references a ‘TodayPay wallet,’ so I’m guessing that the consumer initiating the return receives the money through the wallet and then can redeem the money from the wallet through several different mechanisms (gift card, refund on card, bank transfer, etc.) The real question is settlement speed. Is the consumer getting the money instantly, in advance of the merchant processing the return? If so, who is covering the risk of fraud? The merchant or TodayPay? Or is the consumer getting instant confirmation of the return, but the actual money is pending until the return is processed (similar to how standard Venmo P2P transactions work)?
#6: The Brewing Fight Over Consumer Consent
What happened?
Argyle, payroll API provider and sponsor of great podcasts, just released a new product called Passport:
Argyle Passport is the mechanism by which consumers have complete control of the payroll connections they authorize via Argyle. Think of it as a sort of next-generation switchboard, where individual consumers can view all of the payroll connections they’ve made to third-party service providers and turn those connections on and off as they see fit.
So what?
This isn’t a new idea. Plaid introduced a similar consumer-facing dashboard for the open banking space nearly two years ago.
However, I think Argyle is wise to prioritize this product for the payroll space.
Consumer consent has quietly become a point of contention in the open finance ecosystem. Everyone acknowledges (at least publicly) that it’s the consumer’s data, and they can share it with whomever they want. The question is, who are they giving that consent to? Where does that data permissioning experience live? Which company controls it?
Data providers (banks, payroll providers, etc.) argue that it should sit with them; the consumer’s data lives there, so the mechanisms for granting and managing permissions to access that data should too.
Data aggregators (Plaid, Argyle, etc.) argue that permission should be granted at the point of need with the authorized third party (the fintech company that is using the data) and that the aggregators can provide the dashboard for seeing and managing permissions across third parties.
#7: Small Business Owners Love Free Tools
What happened?
Square is introducing a bunch of generative AI-powered content creation tools for small business owners:
Square this morning took the wraps off of new 10 — count ’em, 10 — generative AI capabilities focused on customer content creation, onboarding and setup.
One of the new AI-powered features, Menu Generator, allows restaurants to create a “full menu” on Square in “just minutes,” the platform promises in a press release.
Square’s new generative email copy feature … taps generative AI to create personalized email messages to customers. And … Square’s newly launched website copy generator, which writes headlines — and entire blogs — given a brief text prompt.
So what?
This may seem kinda trivial and silly, but it’s actually a part of a much larger (but still rather silly) contest between all the big platforms that serve small businesses – who can build the most free tools to help small business owners save time?
Shopify offers a business name generator, a logo maker (which I used to make the Fintech Takes logo), a library of stock photos, a business plan template, a link in bio tool, and a QR code generator.
Ramp offers an even larger library of free tools, including a mission statement generator, a burn rate calculator, an invoice generator, a library of startup pitch decks, and a company name generator, among others.
If you serve small businesses, this is what you do with any bored engineers who have free time on their hands.
Now, I guess you can throw generative AI at this problem as well.
#8: Pay-by-Bank
What happened?
Adyen and Plaid partnered up:
Adyen … is pleased to announce its Pay-by-Bank services in North America will launch in early 2024 in partnership with Plaid … Building on Adyen’s historical investments in the region – which span a US Branch License and local tech hubs – as well as the platform’s burgeoning embedded financial services, this collaboration was designed to unlock the best enterprise payment solution of its kind.
So what?
Coming on the heels of Mastercard announcing a partnership with J.P. Morgan to enable pay-by-bank, all of this seems designed to drive executives at Visa out of their minds.
I also find it interesting (though not surprising) that Plaid is teeming up with Adyen on this rather than with Adyen’s big U.S. competitor Stripe. As you may recall, last year, Plaid got mad at Stripe after Stripe announced that it was going to be launching its own open banking capability. I haven’t heard much about Stripe’s Financial Connections product since then, but I guess feelings are still hurt.
Regardless, this seems like a smart move for both Plaid and Adyen. I’m still not 100% convinced that pay-by-bank is the future of payments, but payments companies are sure doing everything they can to prove otherwise.
#9: This Gives Me Hives
What happened?
A fintech company in Canada raised some money:
Vancouver, B.C.-based startup Hiive raised $4.2 million in fresh cash for its marketplace that allows investors and employees to buy and sell shares of privately held venture-backed companies in the secondary market.
Founded in 2021, the startup aims to “unlock the full value of the private markets” for users by automating a marketplace for transacting private shares. Hiive said it provides more accurate and real-time valuations for late-stage startups based on bid, ask, or trade prices obtained directly from confirmed buyers or sellers on its platform, reflecting the methodology used in public market valuations.
So what?
This type of fintech continues to be my least favorite type of fintech.
If you were to make a list of 1,000,000 biggest and most important financial services and financial services-adjacent problems that need better solutions, a more liquid secondary market for shares of private tech companies wouldn’t come close to making it.
And yet Hiive was able to raise $4.2 million, at a time when plenty of other founders who are focused on far worthier problems can’t raise anything, because this is a problem that is personally important to VCs.
Yuck.
#10: Inventory Financing for Emerging Retail Brands
What happened?
A fintech lender raised some money:
Lunr, a leading fintech provider of inventory financing for emerging retail brands, today announced a $6 million funding round
Lunr empowers differentiated consumer brands across all categories, including standout newcomers in beauty, personal care, food, home goods, and toys. With Lunr’s strategic financing and retail expertise, emerging brands have achieved rapid expansion on the shelves of leading retailers like Target, Walmart, Whole Foods, and Costco. Lunr’s data-driven approach provides the insights and capital for brands to maximise opportunities at the largest national retailers.
So what?
This is interesting.
The intense focus on emerging D2C brands that operate in specific verticals and that need capital (and expert advice) to make the jump into retail reminds me a bit of the private equity investment playbook (which has been heavily tilted towards small, founder-owned companies in recent years).
Lunr’s model is much more founder-friendly, and if it stays focused on financing inventory for retail expansion, perhaps not too risky. Generally speaking, inventory financing is one of the least risky types of small business lending out there. As the lender, you are essentially being asked to underwrite a really great trade – help me buy as many of these widgets as possible for $1 each so that I can turn around and sell them for $2 each.
Also, this is a pretty cool detail:
Over 50% of Lunr’s portfolio comprises BIPOC and women-led brands that are leveraging these capabilities to drive retail growth.
