FTT Embedded Finance


Embedding The Power of Partnerships – From the Middle East to Gig Economy

Your weekly resource for noteworthy news, fascinating features, and fintech titbits that caught our eye. Whether you live by your Twitter lists, save your Google Alerts or simply scroll through LinkedIn for insights and commentary – there is a wealth of content that weaves a global story around fintech.

Our job at Fintech Talents is to work within that global story – finding the news items, conventional wisdoms and hard data that aids us in bringing the industry the best content, community and experiences in the business. This week’s FTT Bookmark of timely resources and real time conversations that are shaping fintech is brought to you by Flora Pleguezuelos, Product & Content Manager at VC Innovations.

Discover-Settle BNPL $30 million partnership

Discover, the financial services firm that owns Discover Bank, has partnered with Settle, a buy now pay later firm. The Chicago-born bank has signed a partnership to invest $30 million in the BNPL start-up Settle. The agreement involving both firms is based on a referral programme that will encourage Sezzle users to acquire Discover’s products such as debit and credit cards, while additionally building a BNPL solution for Discover Global Network. Discover Card is currently the third largest credit card brand in the US, with nearly 50 million cardholders. This follows the recent boom in US banks entering the BNPL space. Barclays US Consumer Bank announced early this year that would be offering BNPL services for its merchant partners.

Sezzle is a start-up that started providing its services in 2016, and already has an impressive customer base of over 34,000 merchants offering BNPL services to over 2.6 million online shoppers.

According to Oliver Wyman, between $20 to $25 billion transactions were eased in the US in 2020 because of BNPL fintechs, a number that is expected to grow. Kaleido Intelligence fintech research firm predicted that point-of-sale (POS) instalment payments will reach $680 billion by 2025.

The partnership will allow Discover to expand its offerings and amplify its customer base. They will also challenge other banks to also offer BNPL services. Since Discover is seen as one of the industry leaders in retail banking innovation, this partnership could start a trend for other retail both digital and brick-and-mortar banks to start partnering with fintech to offer BNPL services.

High impact fintech trends in Emerging Markets – The Middle East

According to Jupiter AM’s last research paper “The Innovations Disrupting Financial Services in Emerging Markets”, that highlights the fintech trends with the largest impact in 2020, there are huge opportunities for investors to further enhance their fintech exposure.

The predominant fintech trends spotted in the research paper include e-commerce, the rise of super apps, cash-less society, financial inclusion, cryptocurrencies and digital banking. Fintech industry growth is quickly picking up in places such as the Middle East given that Emerging Markets are much more agile adapting to technological innovations (due to the lack of legacy infrastructure). Additionally, major economies in the region are devising supportive regulatory plans and projects to support fintech innovation.

Traditional financial institutions are already dramatically changing the approach to the ways in which they are offering and delivering their products and services. They will need to o continue to do so following shifts in customer behaviour during the COVID-19 pandemic, or they will struggle to compete in the market. The low barriers to enter the industry mean that there is a massive number of fintech players entering the market, which has become a critical threat to established financial firms.

The reality of a cashless society is becoming a reality driven by the increased adoption of cashless payments in recent years and supportive e-commerce market dynamics. Saudi Arabia’s Vision 2030 has officially committed to achieve 70% cashless payments for all transactions.

Financial inclusion is likely to become a huge opportunity in the Middle East with the rise of fintech investment and innovation. The personalization distinctive trait of fintech solutions and products has the ability to secure a market that has not been penetrated by traditional banking.

Walmart and Green Dot partner to offer deposits accounts

Walmart and Green Dot have announced that they plan to turn Walmart’s MoneyCard (a prepaid card) into a deposit’s account. This has alerted the banking industry, that has been scared since the retailer’s customer base is of 240 million, larger than JP Morgan Chase customer base of over 50 million customers, the biggest retailer bank in the US. Walmart has been expressing its interest to enter the banking industry from a long time, which would become a significant threat for the banking industry.

This comes in times where traditional retail banks are already facing a strong competition coming from digital banks, credit unions that are expanding from their traditional offerings, and now the threat that other non-financial institutions, such as Walmart or Amazon that are starting to offer financial services to customers. It is a big concern for bank, particularly given that deposit accounts are their main source of liquidity.

Walmart owns some Green Dot special class shares, and it is Green Dot’s biggest retail customer, accounting for 27% of Green Dot’s operating revenue in 2020. Green Dot is both a bank holding company (since acquired Green Dot Bank in 2011) and a fintech. Walmart’s offerings jointly with Green Dot includes some website functionalities apart from Walmart MoneyCard. The two companies have had a longstanding partnership that also includes TailFin Labs LLC, a fintech accelerator. From this partnership, Walmart will receive a commission, but the deposit accounts will still belong to Green Dot Bank.

While banks and other financial institutions see Walmart and other embedded finance players as a big threat and competitor, for the retailer perspective, the benefit perhaps has more to do with picking up with their main retail competitors such as Amazon or Shopify.

Want to learn more? Join us September 1st, 2021 (09.00am PT) as we explore embedded finance trends and case studies, register now for FTT Embedded Finance North America.

$3.8 million seed round raise for Brazilian embedded lending fintech Dinnie

Dinie, Brazil’s pioneer API-first embedded lending fintech has raised USD $3.8 million seed round that will be used to accelerate the firm’s end-to-end embedded credit infrastructure, serve embedded products (such as business overdraft or BNPL for businesses) to over 15,000 MSMEs and further expose their APIs to the country’s largest e-commerce platforms.

The seed round, led by Accion Venture Lab and K50 Ventures, also accounted with the participation of Flourish Ventures, Domo Invest, Endeavor’s Fund Scale Up Ventures and Tribe Capital, to name a few. The company has also announced that has secured a further USD $20 million in debt financing raised from Empirica Investimentos, having managed to conclude Dinie’s securitization structure.

Brazil is home to more than 17 million MSMEs, there is a big pool of opportunities for the lending fintech firm. The German-born Brazil-founded start-up approach is to embed their services with existing platforms used by MSMEs, since it is a very simple process, the reach and opportunities that the company has are massive. Dinie leverages data from MSMEs platforms and quickly approves and underwrites credit, while monitoring cash flow and repayment behaviours that will later adjust such credit lines and approve future offerings. The fintech also enables MSMEs to fund their working capital and pay daily expenses.

Marqeta partnering with Payfare to enter the gig economy

Marqeta, a card issuing platform, is partnering with Payfare, a digital banking and instant payout fintech, in pursuit of opportunities in the gig economy. The gig economy connects freelancers with customers through digital platforms, and as reported by Mastercard, it is expected to grow to $455 billion in 2023.

Marqeta, which reached a $14.3 billion valuation earlier this year after being listed in the stock market, is currently operating in 36 countries and looking at entering new markets. The powerful partnership will blend Marqeta’s card and payment services with Payfare’s instant payouts to bring faster payment solutions.

The COVID-19 pandemic has accelerated the on-demand services, that is also expected to grow as the world reopens, which will lead to bigger opportunities for Payfare.  Payfare partners with marketplaces offering digital banking and instant payout services. Some of their clients include DoorDash, Uber or Lyft.

Join us September 1st, 2021 (09.00am PT) to hear more case studies from Marqeta in the embedded finance space. Register now for FTT Embedded Finance North America.. Complementary passes are available until August 24th.