Fintech Highlights - 10/8/2024

Here's what we've been watching this week 👇

Pinned to the Top

JPMorgan Chase wants to replenish banking deserts — areas with very low branch access in the U.S. — by opening nearly 100 new locations in low-income areas, WSJ reports.

Why it matters: The pandemic accelerated the trend of bank branch closures, which have disproportionately impacted communities with high concentrations of lower-income, Asian, Black and disabled residents, many of whom still prefer to bank in person.

• By the numbers: A recent study from the Philadelphia Fed shows that areas of the country that are predominantly Asian and Black saw the biggest declines, -7.6% and -6.6%, respectively, in local bank offices between 2019 and 2023, compared to the country's overall change (-5.6%).
• And the only group that gained banking deserts significantly faster than the 6.4% overall national rate were majority-Black communities (+10.1%).

Flashback: Bank consolidation in the wake of the Great Recession and a rise in mobile banking businesses kicked off the wave of branch closures more than a decade ago.

• The trend picked up pace during the pandemic as banks shrank their physical footprint to cut costs.

The latest: As of Q2, Wells Fargo, PNC and U.S. Bank closed the most number of local outposts over the past 12 months.

• JPMorgan Chase bucked the larger trend and opened three, and it's said it plans to add more than 500 over the next three years.
• Over the past five years, the company has also been testing a branch format that features added public spaces for financial literacy workshops and small businesses.

What they're saying: "If they didn't work, we wouldn't do them," JPMorgan Chase CEO Jamie Dimon told WSJ about expanding the format nationwide.

The BFD

UK banking startup Revolut has urged Meta to shoulder the costs of reimbursing victims of bank fraud after the social media platform launched an initiative to allow banks to share transaction data with the company to clamp down on financial crimes.

Revolut head of financial crime Woody Malouf said social media platforms shared no responsibility for reimbursing fraud victims and had no incentives to act on the problem, the Financial Times reported.

Why this is the BFD: Revolut has claimed more than two-thirds of scams that UK customers reported to the fintech company originated through Facebook and Instagram. Trade groups estimate that so-called authorized push payment fraud, where fraudsters trick victims into sending them money from their bank accounts, caused losses of £460 million in the UK last year.

What's next? Starting this month, UK banks and payments companies will be responsible for refunding fraud victims for up to £85,000. Meta urged Revolut to join its pilot Fraud Intelligence Reciprocal Exchange program.

M&A

Mastercard (NYSE: MA) agreed to buy Minna Technologies, a Swedish subscription cancellation startup that had raised $27m from firms like Nineyards Equity, 13books Capital and MiddleGame Ventures. More here ->

Freetrade, a London-based online trading platform that's raised over $100m from VCs, agreed to acquire U.K. customers of Australian investing app Stake, which has raised over US$90m from firms like DST Global and Tiger Global. More here ->

JLL (NYSE: JLL) agreed to buy Raise, an SF-based real estate tech and brokerage firm. More here ->

Mizuho plans to acquire a stake in the credit card unit of Rakuten, which had previously considered restructuring the business. More here ->

Settle, a New York-based provider of working capital and accounts payable software to CPG brands, acquired Columbus, Ga., inventory management software provider Turbine, per Axios Pro. Settle has raised around $100m from firms like Founders Fund and Kleiner Perkins. More here ->

Stax, an Orlando payment tech company that's raised over $300m from VCs, acquired BlockChyp, a Linden, Utah, payments gateway. More here ->

Hg plans to launch an auction for SmartTrade, a French liquidity management software provider that could fetch €1b, per Bloomberg. axios.link/4eRFyLL More here ->

Marsh McLennan has announced plans to acquire McGriff Insurance Services, a leading provider of insurance broking and risk management services in the United States. More here ->

Fintech

Koho, the Canadian neobank focused on the underbanked, raised C$40m. More here ->

Rogo, a generative AI startup focused on financial services, raised $18.5m in Series A funding, per Fortune.  Rogo combines state-of-the-art language models with deep financial servicesexpertise, allowing it to understand and interpret complex financial data with high accuracy.  More here ->

Plumery, a Dutch digital banking platform, raised $3.3m. Plumery provides a digital banking platform called 'Digital Success Fabric' that enables financial institutions to rapidly implement and customize digital solutions More here ->

Zepz (fka WorldRemit), a London-based money transfer service, raised $267m. More here ->

Connected Data, a British debt management startup, raised £2.2m led by Maven Capital Partners. More here ->

Barte, a Brazilian payments startup, raised $14.3m led by AlleyCorp. More here ->

Investtech

BMLL, a London-based investment analytics platform, raised $21m. It provides historical market data and analytics to financial institutions.  More here ->

Crypto

RD Technologies, a crypto payments startup founded by the ex-CEO of Hong Kong's de facto central bank, raised $7.8m from HongShan, Hivemind Capital Partners, and Aptos Labs. More here ->

Insuretech

🚑 Flora Fertility, a Canadian insurtech, raised C$1.5m in pre-seed funding. Flora's product is described as the first individually-owned fertility insurance solution in the market. More here ->

Proptech

Neeve, a cloud platform-as-a-service for smart buildings, raised $15m co-led by Cantor Fitzgerald and RXR. More here ->

From the Stash

Bank of America mobile app, digital interface down - Tens of thousands of Bank of America clients reported outages of online and mobile banking services today.  At 1 p.m. ET, more than 20,000 clients had reported issues with the $3.2 trillion bank, according to website Downdetector, which publishes the status of outages in real time. More here ->

25 questions financial institutions are asking about gen AI - Financial institutions are exploring generative AI through their own center of excellence initiatives, pilot programs and internal applications.   However, surrounding the technology “there are more questions than there are answers,” Kris Lazzaretti, senior vice president of data analytics at payments data solution provider Deluxe, told Bank Automation News. More here ->

Fintech funding: Citi Ventures cautious of AI hype - Citi Ventures is aware and wary of a potential hype cycle relating to AI and aims to avoid investing in overvalued startups.   “The over-hype, under-hype cycle is something that happens continuously, and AI has not been immune to that,” Managing Director Luis Valdich told Bank Automation News. More here ->

First Citizens, SVB taking integration slowly - First Citizens Bank and Silicon Valley Bank are slowly integrating their tech stacks while keeping their individual digital road maps relatively separate.  “There has been a period of isolation where First Citizens wanted us to complete our digital journey and road map,” Milton Santiago, head of global digital solutions at SVB, told Bank Automation News. More here ->

Wells Fargo applies vendor tech across business lines - Wells Fargo looks across all of its business lines when making investment decisions and selecting technology vendors.  For the $1.7 trillion bank, working with vendors is “about the direction of the firm, our customer-forward focus and then thinking about intention and modernizing our core infrastructure,” Jazz Samra, head of strategic partnerships and innovation initiatives, told More here ->

Lenders tap AI to serve niche market segments - Banks have traditionally been the lenders of choice for small businesses, but there are alternatives — at least in the legal industry.  Alternative asset management firm Legalist, which has $1 billion assets under management, is tapping AI within the origination process to offer litigation finance to its clients, Eva Shang, general partner and chief executive More here ->

Mobile solutions offer competitive edge for credit unions - Credits unions tapping Dublin-based fintech Pulsate for mobile solutions see a return on investment with a major uptick in funded loans, engagement and transactions.  It is imperative that “community financial institutions [are equipped with] the tools they need to not just survive in this digital-first world, but be competitive,” More here ->

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