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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Mexico is known for a lot of things. The region is blessed with a rich food and drink culture, is home to historic Mayan temples, offers beautiful cenotes, and is lined with picturesque beaches.
Typically, Mexico is not associated with being a global fintech hot spot. However, the region is prime for growth. Half of Mexico’s residents are unbanked, more than half own smartphones, and 70% have internet access. These factors, combined with the country’s relatively young population (43% of people there are under the age of 25) make Mexico fertile ground for alternative banking services.
We took a look at Mexico’s 441+ fintech startups to bring you the top five (based on website visits):
Kueski
Founded in 2012, Kueski uses big data and analytics to approve and deliver loans in minutes. Headquartered in Guadalajara, Mexico, the online lender has delivered 3.3 million loans and raised $39 million in funding.
Kubo Financiero
Headquartered in Mexico City, Mexico, Kubo Financiero is a digital alternative lending platform that offers financial products including savings, personal loans, and term deposits. The company was founded in 2012 and is aimed at serving the country’s middle class.
Konfio
A digital banking and software tool provider, Konfio was founded in 2013 by David Arana and Francisco Padilla and is headquartered in Mexico City, Mexico.
Prestadero
Founded in 2012 and with $909 million in funding, Prestadero is Mexico’s most well-known P2P lending platform. The Mexico City, Mexico-based company offers competitive rates on both loans and investments, making it a popular alternative to traditional banking services.
Conekta
Leveraging AI, Conekta processes online and offline payments to enable financial institutions to identify fraudulent purchases by analyzing transaction behavior while encrypting and protecting financial information. The company is headquartered in Mexico City, Mexico and was founded in 2011.
How does a technology company with a near-50 year pedigree adapt and grow in a world of rapid technological change? How does a company like this meet the challenge of embracing new opportunities while remaining true to its core competencies and values?
“Our core mission has not changed,” Nick Kerigan, Head of Innovation Execution at SWIFT explained in an interview for Finovate TV. “But we are moving from a world of point-to-point messaging to end-to-end transaction orchestration.”
Watch the rest of the conversation to find out how you can collaborate to Innovate with SWIFT.
On the ways SWIFT’s new strategy benefits the payments industry
In payments, we believe we can unlock huge opportunities that help our community strengthen their many existing market segments like core banking, B2B, and cross-border payments. We also think we can open up bold new opportunities for the future around SME and consumer segments. What we’re essentially trying to do is to create instant and frictionless, account-to-account transactions anywhere in the world. The vision is to make international payments as simple and easy as domestic payments.
Obviously that’s a big goal and it won’t be accomplished overnight. But we do think, particularly with our transaction management platform, that it’s fully achievable.
On the key areas of focus in SWIFT’s new innovation agenda
Innovation is not new to SWIFT; we were created to solve a big industry challenge 40 years ago, so that’s at our heart … A few things are high on our mind: one is cloud and simplifying the journey to cloud. All large financial institutions – and smaller ones as well – have important programs around bringing their services into the cloud. Everyone knows the benefits of doing that – and they also know that can be quite a challenging task.
What we’re doing is aiming to ease that journey for our customers. We’ve launched new cloud-based products and we are also making our existing products cloud-ready so when our customers are ready to migrate and move, we are ready for them.
On the collaborative innovation and the importance of partnership
Organizations in the financial community often find it challenging to balance the imperative of innovation with everything else they have to do on their agenda, which are often driven by forces such as regulations and others, that means that they are “must do.” What we say with collaborative innovation is that one way of unlocking that challenge is to work much more together as a community so the burden isn’t on any one bank or institution, but the burden is more shared.
SWIFT is well-placed to help the industry collaborate because we are a neutral, member-owned organization that sits in the middle of this great financial community. We think that by enhancing collaborative innovation and working together we can maybe unlock some of these problems that individually we struggle to solve.
Walgreens announced this week it will launch a new bank account offering. The pharmacy chain, in partnership with InComm, is launching a Mastercard debit card to pair with both a mobile banking app and in-person service.
Here are a few things to know about the new accounts:
Available both on mobile and in-person
Unlike most digital banks that have launched in recent years to challenge incumbent banks, Walgreens’ new account will serve users in person. By the second half of this year, the bank plans to serve its client base at nearly 9,000 stores. As of now, there is no word on what specific services will be available in-store vs. online but it is clear that account onboarding will be available through both channels.
This differentiating factor places the “Bank of Walgreens” at a significant advantage for two major reasons. First, 78% of Americans live within five miles of a Walgreens or Duane Reade store. That makes for easy access, especially in rural communities where banks are closing their doors but cash usage is still prevalent. Second, because of the foot traffic into its stores, Walgreens has a built-in potential client base to whom it can freely advertise.
In addition to in-person services, users will also have the option to manage their account in a mobile app. Walgreens has tapped InComm’s banking-as-a-service platform to create a modern digital experience.
Geared toward an older audience
Because the elderly population tends to need prescription refills on a regular basis, they tend to visit pharmacies more often. Given the demographic of this foot traffic, combined with the fact that 20% of Walgreens’ app users are 55 years of age and older*, Walgreens will likely target a more senior audience as banking clients.
The target market will truly differentiate Walgreens’ bank accounts from the myriad of digital banks that have launched in the past few years, many of which target Generation Z.
Tied into Walgreens’ existing rewards program
Launched last November, the myWalgreens customer loyalty program offers users 1% in-store credit in return for every dollar they spend on typical items and 5% in-store credit for every dollar spent on Walgreens branded products. Walgreens’ new debit card will enable users to more seamlessly earn and spend these rewards.
ESG investing is no longer the only environmentally conscious aspect of the financial services world. Recently, we’ve seen an explosion of fintechs– both new and incumbent players– going green.
Here’s a roundup of who’s who in sustainable fintech:
Ando Money
Ando Money is a California-based digital bank that uses client deposits to support green initiatives.
Ant Group
Ant Group, the fintech subsidiary of China-based Alibaba Group, has pledged to go carbon neutral by 2030.
Aspiration
Aspiration is a digital bank that won’t use consumer deposits to fund fossil fuel projects like pipelines, oil drilling, and coal mining. Additionally, the fintech plants trees in collaboration with reforestation partners when users round up their purchases.
Atmos Financial
California-based Atmos Financial offers a savings account that uses client deposits to exclusively finance climate-positive projects at scale.
Carbon Chain
Founded in 2019, CarbonChain offers organizations visibility into the emissions of their supply chains to identify the highest polluting transactions.
Carbon Collective
Carbon Collective offers roboadvisory services that help users divest from fossil fuels and invest in stock market funds that are low-carbon and don’t depend on fossil fuels for their core business.
Carbon Zero
Carbon Zero offers a credit card that rewards users’ purchases by using merchant-paid fees to buy carbon offsets.
Cloverly
Cloverly integrates with existing fintech apps, financial institutions, and payment processing services to assess their carbon impact and determine offsets needed.
Cooler Future
Still in beta, Cooler Future is a Finland-based startup that enables users to invest in a sustainable portfolio.
Doconomy
Doconomy is a Sweden-based digital bank that wants to inspire behavioral changes and reduce unsustainable consumption and carbon emissions.
Ecocart
Ecocart is a browser extension that works with merchants to help customers offset the environmental impact of their online purchase.
Helios
Founded in 2019, Helios is a France-based fintech that offers a digital bank account that helps users offset their carbon footprint.
Joro
Joro connects to users’ payment cards to analyze their carbon footprint and determine the biggest drivers of their carbon footprint.
Meniga
As part of its digital banking platform, Meniga provides a Carbon Insight tool that offers end users visibility into their carbon footprint based on their spending.
NetZero
NetZero connects to users’ bank accounts to determine the carbon footprint of their purchases. The fintech also helps users reduce their emissions and offset their footprint.
Nori
Headquartered in Seattle, Washington, Nori is developing a marketplace for carbon removals.
OpenInvest
OpenInvest helps advisors offer their clients ESG investing that align with their values.
Raise Green
Raise Green offers a marketplace where users can invest in local, impactful projects.
ReGal
Headquartered in the U.K., ReGal offers alternative financial services based on Green Blockchain.
Ripple
Payments network Ripple pledged to be carbon net-zero by 2030 and to decarbonize public blockchains.
Stripe
U.S.-based ecommerce and mobile payments company Stripe offers a tool called Stripe Climate. The offering enables businesses to direct a portion of their revenue to help scale emerging carbon removal technologies.
Tomorrow
Tomorrow offers a digital bank account that uses customer deposits to fund sustainable initiatives. The startup’s premium account, Tomorrow Zero, offers a payment card that is made of wood.
Treecard
Treecard offers a free payment card made of wood. The company donates 80% of its profits to reforestation.
Trine
Trine is a Sweden-based company that allows firms as well as private and professional investors to crowdfund solar energy products.
Tumelo
Tumelo helps investment platforms and pension providers engage investors by showing them the companies in their portfolio and empowering them to vote on ESG issues.
This week for our Finovate Global Lists feature we congratulate the graduates of Startupbootcamp FinTech Dubai. Eleven startups successfully completed the MENA-based accelerator program in late February, wrapping up the three-month experience with a pitch opportunity before an audience of investors, corporate partners, mentors, and industry analysts.
“As the Demo Day has passed and the 11 startups of our third cohort continue their growth journeys – we are incredibly proud to welcome the 23 amazing founders of these startups as part of our global @sbcFinTech family!” Startupboootcamp Dubai announced via Twitter.
The graduates are:
Finllect: a UAE-based financial wellness app for Gen Zs.
Flaist: a digital transformation platform for banks.
Singular Capital: a digital asset mobile wallet based in Malaysia.
Open CBS: a Hong Kong-based, open and scalable, cloud-based core banking system for smaller FIs.
Absolute Collateral: a digital B2B capital markets trading platform based in the U.K.
Tajjir: a Jordanian startup that offers a stock trading software solution for retail investors.
Aura Technologies: an insurtech firm that enables non-insurance businesses to sell insurance to their customers.
CaaS (Compliance-as-a-Service): a regulatory reporting platform based in the U.K.
Stornest: a UAE-based digital legacy planner to support end of life planning.
Raseed: an investment platform that enables users in the UAE and Saudi Arabia to buy and sell U.S. stocks.
Kilde: a global private debt marketplace headquartered in Singapore.
Startupbootcamp FinTech is conducted in partnership with Dubai International Financial Centre (DIFC), Visa, HSBC, and Mashreq Bank. The program is open to fintech startups throughout the MENA region, as well as around the world, and offers expert-led Master Classes, tailored mentorships, as well as coworking space and living expense support for the duration of the program. Participants also benefit from access to corporate partners and an alumni growth program that helps startups remain networked after the program ends.
Since its launch in 2018, more than 30 fintech startups innovating in payments, lending, and Islamic digital banking count themselves as alumni of the accelerator. Startupbootcamp FinTech Dubai is part of an international network with more than 20 industry-focused programs for technology startups. The network boasts 950 startups accelerated – 41% of which were female-led – that have raised a combined $869 million (€ 727 million) in total funding.
Here is our look at fintech innovation around the world.
One of my favorite quotes from the current U.S. president is “Don’t tell me your values; show me your budget.” Swap out “budget” for “brand” and you’ll learn a lot about where the priorities of Wise, the fintech formerly known as TransferWise, currently lay.
“Our customers now need us for more than money transfers,” company CEO Kristo Kaarmann announced on the Wise blog earlier this week. In the beginning, it was sending money that was “too expensive, slow, and inconvenient,” he noted. Now, he believes that banking services suffer from many of the same problems that money transfers once did and, further, sees his rebranded company as being in an ideal position to do something about it.
Color us convinced. But for the doubters, here are the three, pretty good reasons why the Wise rebrand makes great sense.
First reason: Banking is Beautiful … and Broad
Wise sees itself as a “community of people and businesses with multi-currency lives.” This image, and the company’s origins as a cross-border money transfer innovator, sync well with our bank-in-your-pocket / work-from-anywhere / market-at-your-fingertips world.
In addition to its cross-border money transfer business, Wise offers a multi-currency account that enables users to hold more than 55 different currencies and receive payments in ten. The company also has issued more than one million of its debit cards. In fact, Wise announced a partnership with Visa last month to expand its debit card offering to the Asia Pacific, Europe, MENA, U.K., and U.S. markets.
And while Wise has not secured a banking license – and expressed no plans to do so – the company was granted a license from the Financial Conduct Authority last summer to offer investment services to retail customers.
These are the ways, in Kaarman’s words, that Wise is increasingly “replacing international banking for many” of its customers. And it is this combination of infrastructure and culture that Wise is leveraging in its pivot toward banking.
Second reason: Growing Pains
These new offerings underscore the degree to which the company already has outgrown its old name. Like many fintechs, Wise has been, ahem, smart to note that its road to growth will have to extend beyond cross-border payments. Money might make the world go ’round. But moving money around the world, as a business, has its limitations.
In their 2018 report, A Vision for the Future of Cross-Border Payments, McKinsey highlighted a number of trends that are likely to impact this landscape. These include both emergent technologies such as distributed ledger technology, as well as new Big Tech entrants like Alibaba and Amazon, that will offer challenges to banks, service providers, and fintechs in the cross-border space. The rebrand makes it much easier for Wise to re-define itself beyond money transfers at a time when many people are migrating to digital financial technologies in earnest for the first time.
Additionally, as at least one observer noted, “Wise” fits far better on a stock ticker than any truncated version of “TransferWise”. That leads us to our third pretty good reason below.
Third reason: IPO?
Among all the reasons cited by the company in announcing their rebrand, a potential initial public offering, was not among them. This may be for good reason. Sky News reported earlier this year that then-TransferWise had engaged both Goldman Sachs and Morgan Stanley to lead an IPO. The report cites analysts who believe an offering could give the company a valuation of more than $5 billion.
If the rumors are true and an IPO is imminent, then the rebrand is all the more timely – and further comment unlikely. That said, company co-founder, former CEO, and current Chairman Taavet Hinrikus has expressed openness to a public offering in the not-too-distant past.
“In a few years it will be time to think seriously about becoming a public company like the strongest and most trusted financial institutions are,” Hinrikus wrote. “But when we do that we will explore that through our own lens – how will it help our customers? How will it help us achieve our mission faster.”
With more than $6 million transferred around the world every month – saving its 10 million customers more than $1.5 billion every year, why shift the emphasis toward banking? For now, Wise seems content to enjoy the benefits of being bank-adjacent rather than pursue the final step of being a fully-licensed financial institution.
By now you’ve likely heard of Central Bank Digital Currencies (CBDCs). With consumers’ lives taking place increasingly online and the recent boost in cryptocurrency usage and value, much of the global economy is ready to move from discussing CBDCs to formally implementing a CBDC strategy.
But though there has been some progress in this area, there is still a lot of confusion in the broader banking and fintech community. If you’re feeling a bit behind on the CBDC discussion, here are five things to know that can help you catch up:
Six countries are currently piloting CBDCs
While much of the world is struggling to wrap their heads around CBDCs, some countries are ahead of the game and already have pilot programs in place. Of these, the most well-known is China, but Thailand, the Republic of Korea, Ukraine, Sweden, and Uruguay are also actively piloting CBDCs. Additionally, Brazil reports it plans to formally launch its CBDC next year.
A handful of countries, including Canada, Venezuela, Cambodia, South Africa, and the UAE have made key developments with their CBDC programs.
Other countries are still in the research phase or have had no development.
Check out this interactive map from the Atlantic Council to learn more about each country’s progress.
CBDCs don’t necessarily need the blockchain
Many people associate CBDCs with Bitcoin, which can be a helpful way to think of distinguishing Central Bank currencies from fiat money in digital form. But while Bitcoin leverages the blockchain, CBDCs don’t necessarily need to.
That’s because blockchains are used when there is no central party to provide trust. When central banks serve as the trustworthy authority, however, this decentralization is no longer necessary.
In fact, according to a survey conducted last February by the U.K.’s Central Banking Magazine, only one reserve bank said that they planned to use a blockchain for the structure of distributing their CBDC.
There are two types of CBDCs
Many people don’t know this, but there are actually two types of CBDCs– wholesale and retail. Wholesale CBDCs facilitate clearing operations between the central bank and its member banks, while retail CBDCs are for the general public to use, taking the place of the bank note.
There will still be room for cash
CBDCs will work alongside cash, or fiat currency. While there are both negative and positive aspects to paper money and coins, there will still be a cash economy. CBDCs simply combine the convenience of a cryptocurrency with the stability and regulation of fiat currency.
CBDCs won’t harm banks
As Chris Skinner highlighted in a blog post recently, CBDCs have the potential to disrupt banks to the point making them obsolete. Because CBDCs are issued digitally, they could technically circumvent banks.
Skinner concludes, however, “The true role of banks, whether in a digital currency or cryptocurrency world, is to store and exchange value with trust. That’s why they’re regulated the way they are and why they exist the way they do. And that isn’t going away anytime soon.”
Though we’re only four weeks into it, 2021 has been a big year for cryptocurrency. While there has been a multitude of news items in the crypto space, there are a handful of items worth highlighting.
Though much of the cryptocurrency news cycle is often quite hyped, it’s important for the traditional financial sector to keep their finger on the pulse of major news pieces in this space, especially as the decentralized finance trend takes off. That said, here are six things you need to know about what’s going on in the cryptocurrency realm:
Elon Musk stands bullish on Bitcoin
The price of Bitcoin hit an all-time high at the beginning of January of this year. A few weeks later, during an interview on Clubhouse, Tesla CEO Elon Musk said, “I do at this point think bitcoin is a good thing. I’m late to the party, but I am a supporter of bitcoin.”
This vote of confidence for the popular cryptocurrency didn’t send the price of bitcoin to the same highs that we saw on January 8. It did, however, offer it a nice boost in price and a stamp of approval that will be beneficial in boosting the cryptocurrency’s legitimacy.
Ethereum hits all-time high
The price of Ethereum reached an all-time high today, this time breaking the $1,600 mark. Fueling the surge is the pending launch of ethereum futures on the Chicago Mercantile Exchange next week.
While bullish buyers expect to see the price top out around $2,000, others anticipate it will level off.
The Indian government dances around a cryptocurrency ban
India is notorious for its hot/cold relationship with cryptocurrency. In 2018, the country’s central bank banned offering banking services for digital asset firms, but the Supreme Court overturned that ruling last year.
This week, the Indian government revealed that it will likely seek to regulate cryptocurrency, instead of ban it.
Visa announced plans to enable cryptocurrencies trading on its network
In an earnings call, Visa CEO Alfred Kelly said that he wants to make cryptocurrencies “more useful and applicable for payments.” To accomplish this, Kelly sees Visa working with wallets and exchanges to enable users to purchase cryptocurrencies using their Visa card or to cash out onto a Visa card to make a fiat purchase at a traditional merchant.
During the call, Kelly disclosed that the payments giant is already working with a handful of digital currency platforms and wallet providers to serve as their card issuer. This list includes crypto.com, Blockfi, Fold, and Bitpanda.
The OCC OK’d stablecoins
In the first week in January, U.S. Office of the Comptroller of the Currency (OCC) last week published Interpretive Letter 1174 detailing that banks may use stablecoins and independent node verification networks (INVNs) to facilitate payments for customers. Simply put, banks can transfer stablecoins to other banks.
This development happened under the watch of Acting Comptroller of the Currency Brian Brooks, who stepped down mid-last month. Taking Brooks’ place is Blake Paulson, whose attitude toward cryptocurrencies is untested.
Gemini began offering a savings account
Cryptocurrency exchange Gemini is starting to step on traditional banks’ toes. That’s because the New York-based company is launching a savings account called Earn that allows users to move their crypto holdings into high-yield savings paying as high as 7.4%.
Thanks to Gemini’s business model, it can afford to pay the high rate. That’s because it lends users’ cryptocurrency deposits to other borrowers through its partner, Genesis Global Capital, at a higher interest rate.
More than two years in the making, the FedNow payments initiative – launched by the U.S. Federal Reserve to accelerate payments and transfers – is picking up speed. The project currently has more than 110 banks, financial services providers, and other organizations slated to participate, and among them are ten Finovate alums.
“We’re gratified by the industry’s tremendous interest and willingness to devote time and energy to help us develop the FedNow Service,” Esther George, executive sponsor of the Federal Reserve’s payments improvement initiatives, said. George, who is also President and CEO of the Federal Reserve Bank of Kansas City, added that the pilot has had to “adjust” to accommodate greater than expected interest.
The idea behind the service is to expand the reach of instant payment services offered by financial institutions and enable businesses and individuals to send and receive instant payments, with full access to their funds within seconds. The FedNow Service will leverage the Federal Reserve’s FedLine network, which connects to more than 10,000 financial institutions directly or via their agents.
The pilot program is designed to review the technology’s features and functionality, assess the user experience, and greenlight the product for further testing and eventual general availability. Participating institutions will be retained, post-launch, to provide additional review and advice with regard to issues like adoption roadmap, industry readiness, and overall payments strategy.
“The FedNow Service marks a turning point in the industry’s move to making real-time payments a reality,” Booshan Rengachari, founder and CEO of Finzly, explained. Finzly is one of Finovate’s newest alums – most recently demoing its technology at FinovateWest Digital last fall – and is one of the participants in FedNow’s pilot program.
Rengachari further suggested that this “turning point” was a moment his company had anticipated. “We created our Payment Hub specifically to help FIs prepare and go to market faster with newer RTP networks,” he said. Finzly’s CEO added that this helps “address the challenges of offering single payment API for multiple payment networks without having to run disparate payment systems from multiple vendors.”
The 10 Finovate alums participating in the FedNow project are listed below.
There’s not much room in 2021 for 2020-style pessimism. Sure, if you look, you can find plenty of things to be negative about so far this year. However, one aspect of 2021 that’s giving fintechs hope is the recent uptick in valuations across the fintech sector.
Despite last year’s global events, many fintechs received valuations exceeding $1 billion. In fact, in December 2020 alone, four fintechs, including eToro, Creditas, PhonePE, and GoCardless, received unicorn status.
This year seems to be off to a similarly bullish start, with four fintechs becoming unicorns in just the first three weeks of 2021:
Digit Insurance
India-based Digit Insurance became India’s first unicorn of 2021 after the country saw 11 new unicorns in 2020. Just 15 days into the new year, and after raising $18.5 million, Digit Insurance unveiled a new valuation of $1.9 billion.
Divvy
Spend management startup Divvy received a valuation of $1.6 billion after its Series D round on January 5. The $165 million came from new investors PayPal Ventures, Whale Rock, Schonfeld, and previous backers NEA, Insight Venture Partners, Acrew, and Pelion. The pandemic has spurred increased traffic to Utah-based Divvy; the startup has experienced a 500% increase in monthly sign-ups since March 2020.
Mambu
SaaS banking platform Mambuearned its unicorn title after landing a $135 million investment on January 7. The boost gave the Germany-based company a post-money valuation of just over $2 billion. Mambu will use the funds to increase its presence in Brazil, Japan, and the U.S.
MX
The second fintech unicorn to come out of Lehi, Utah is fintech data company MX. Founded in 2010, MX raised $300 million in Series C funding on January 13, bringing the company’s total capital to $505 billion and boosting its valuation to $1.9 billion. Company CEO Ryan Caldwell said that MX will use the funds to hire more staff and improve its data collection and enhancement capabilities.
The news that retail giant Walmart is turning its attention to fintech is an impressive reminder of how the industry has grown. What began as a land of incumbents defending itself from a siege of digitally-savvy disruptors has become more of an Age of Exploration, in which companies large and small compete for slices of an increasingly valuable and growing market for digital financial services.
What is Walmart doing?
Walmart announced on Monday that it is building a fintech startup that will “develop unique and affordable financial products for Walmart employees and customers.”
“For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but help them manage their financial needs. And they’ve made it clear they want more from us in the financial services arena,” Walmart U.S. president and CEO John Furner said. “We’re thrilled to work with Ribbit Capital in a new venture to help us deliver innovative and needed options to our customers and associates – with speed and at scale.”
The new entity will be majority-owned by Walmart, and the company has previewed a handful of future board members: Furner and Walmart CFO Brett Biggs.
Why are they doing it?
Walmart already offers financial services to its customers in the form of products like its prepaid debit solution, the Walmart MoneyCard, as well as its Walmart Credit Card, check cashing, and money transfer services. The big box retailer also offers consumer financing alternatives like buy now pay later, courtesy of its partnership with Affirm (which went public this week).
Creating a fintech arm or subsidiary would enable the retail giant potentially to offer a wide variety of additional services ranging from investment and wealth management, to insurance, lending, and banking.
Who is helping them?
Collaborating with Walmart in this new venture is Ribbit Capital, the venture capital firm behind Robinhood, Affirm, and Credit Karma. Walmart, in its statement, described the new company as a “strategic partnership” with the Palo Alto, California-based venture capital firm. Founded in 2012 by Meyer Malka, Ribbit Capital focuses on investments in early-stage companies and has an extensive portfolio of investments in fintechs, in particular. These ranks include – in addition to the companies noted above – such innovative fintechs as Revolut, Gusto, Coinbase, and Wealthfront (all Finovate alums, by the way).
“Walmart has a relationship with millions of customers and associates built on trust, security and integrity,” Malka said. “When we combine our deep knowledge of technology-driven financial businesses and our ability to move with speed with Walmart’s mission and reach, we can create and deliver financial offerings that are second to none.”
What’s the upside?
Given the current climate, the tougher challenge may lie in making the argument against Walmart’s flirtation with fintech. Given Walmart’s size and popularity – the company serves more than 265 million customers in 11,400 stores around the world every week – the company is in as good a position as any other retailer – short of Amazon perhaps – to make an impact on fintech wherever it decides to land.
That said, consumer financing and payments both appear on the surface to be the easiest ways for a Walmart fintech arm to make the biggest difference fastest. With regard to payments, as Barron’s observed, Walmart could leverage its ownership of India-based Flipkart. In the review, Barron’s quoted Bank of America analyst Robert Ohmes highlighted the monetization opportunities in financial services as a potential way for Walmart to secure “long-term profitability.”
What are the risks?
On the other hand, Walmart will need to be wary of “diversifying away its edge.” John Zolidis, president of Quo Vadis Capital warns of a potential loss of focus should Walmart aggressively pursue business opportunities away from its “core competency.” Zolidis noted further that the company’s primary customers may not be the earliest adopters of digital financial services, pointing out that nearly 25% of Walmart’s customers do not have a bank account, and 50% lack access to credit.
Then again, these may be exactly the sort of problems for which Walmart’s new fintech venture is a kind of solution.
The U.S. government has approved a second round of Paycheck Protection Program (PPP) loans. The Consolidated Appropriations Act of 2021, which was signed into law late last year, is the second stimulus package, following the passage of the CARES Act in March of last year.
The second round of PPP loans, or PPP2, provides $284 billion in aid to small businesses suffering because of the pandemic. With PPP2, there are a few key differences from the first iteration. Here’s what you need to know:
Eligibility has changed
Unlike the first round, some 501(c)(6) not-for-profit organizations that have fewer than 300 employees may be eligible for funds if they meet limited lobbying requirements.
Businesses may qualify for a second loan
Businesses are eligible for a second PPP loan of up to $2 million if they have used up their first loan, have fewer than 300 employees, and experienced quarterly revenue declines of 25% in 2020 compared to the same quarter in 2019.
Additional expenses are covered
The first round of PPP stipulated that funds had to be used toward payroll, rent, mortgage, and utilities in order to qualify for forgiveness. PPP2 has added a few categories to that list, including operational expenditures, payments to suppliers, property damage costs resulting from public disturbances, and costs associated with protecting employees.
More time to use funds
The “covered period,” or the time the business was required to use the funds in order to qualify for forgiveness, was originally eight weeks. It was later amended to allow borrowers to chose a 24 week period. Under PPP2, borrowers have more options– they can choose any covered period between eight and 24 weeks.
Is it enough?
According to Greg Ott, CEO of Nav, a platform that matches small businesses with lenders, PPP2 is a “much-needed” improvement, but still falls short for some small businesses.
“The primary reasons for this,” he explains, “include the fact that the burden of navigating the complex and intimidating application process is too heavy for most small business owners struggling to survive day-to-day, the bill itself is written by people who don’t genuinely understand what these businesses need, and the traditional banking system simply isn’t set up to prioritize truly small businesses.”
“The new funds are certainly welcome, but it will unfortunately be too little and too late for many business owners,” Ott added.
