Fintech Highlights - 7/18/2023

Fed to propose tougher capital rules for big banks  Banks release earnings. Sigo Seguros raised a round. Here's what we've been watching this week….👇

Pinned to the Top

The Federal Reserve plans to propose tougher rules on major banks with regards to how much money they have to hold as a buffer to weather downturns, the regulator’s vice chair for supervision, Michael Barr, said Monday.

Banks with more than $100 billion in assets would be required to hold an additional 2 percentage points of capital under the proposals, Barr said. The collapse of Silicon Valley Bank and other regional lenders in early 2023 underscored the need to bolster resilience in the banking sector, he said. The $100 billion threshold would mean mid-sized lenders such as Citizens Financial Group, Fifth Third, Huntington and Regions Bank will need to hold more capital, along with the major banks that are subject to current enhanced capital rules.

Barr also flagged changes to the Fed’s stress testing regime, with a heightened focus on global market shocks and operational risks faced by banks. Along with higher capital requirements, the Fed is also considering forcing banks with more than $100 billion in assets to hold long-term debt that can be accessed in the event of a bank’s failure, reducing the impact on the Federal Deposit Insurance Corp.’s pool of funds, which must be topped up when large institutions collapse.

The BFD

The biggest banks in the U.S. have emerged relatively unscathed from a tumultuous start to the year, Hope writes.

Driving the news: JPMorgan, Wells Fargo and Citigroup kicked off earnings season this morning with results that beat expectations.

• But they also were not immune to the effects of higher interest rates that led to the unraveling of Silicon Valley Bank, Signature Bank and First Republic.
• Banks have had to pay higher rates to keep deposits from moving to higher-yielding Treasurys and money-market funds.

By the numbers: JPMorgan saw a 1% increase in deposits from the previous quarter, excluding its First Republic business, and an 8% decline from last year.

• Wells Fargo deposits fell 1% from Q1 and 7% from a year ago.
• Citigroup deposits have remained roughly flat.
• Meanwhile, the average interest rates they’ve had to pay on deposits have moved up 1%–3%, from “next to nothing” a year ago, WSJ notes.

The big picture: Among big banks, deposit levels have fallen for more than a year — with the annual growth rate turning negative last fall and hitting its lowest-ever level of -6% in April.

M&A

Goldfinch Partners and Baupost Group completed the second and final part of their $910m acquisition of London-based B2B payments firm Western Union Business Solutions, which has been rebranded Convera.  More here ->

Cornerstone Advisors of Bellevue, Wash., acquired BankSmart, a Clearwater, Fla.-based consultancy focused on bank operations and payments. More here ->

Cyber insurance startup Coalition has announced its acquisition of the privacy assistant app Jumbo. The terms of the deal have not been disclosed, but Jumbo has confirmed that its app will no longer receive updates. More here ->

Fintech

RightRev, a Santa Clara, Calif.-based cloud-based finance and accounting startup, raised $12m in funding. RightRev provides an app, embedded within the Salesforce platform, enabling Advance Revenue Recognition software that complements Salesforce’s integrated CRM, CPQ, Subscriptions, Orders, Billings, and Cash Collection.  More here ->

CapStack, an operating system for banks, raised $6m. CapStack is deemed as the “first bank-to-bank marketplace,” giving the institutions the ability to share and have visibility into one another’s portfolios. More here ->

Trunk Tools, a New York-based fintech for construction workers, raised $9.9m in seed funding.   More here ->

Jirav, an SF-based financial planning and analysis startup, raised $20m in Series B funding. Jirav offers a library of prebuilt FP&A solutions for specific industries, including financial models, KPIs, reports and dashboards.  More here ->

Solaris, a German embedded finance platform, raised €38m in Series F funding from unidentified insiders at a $1.6b valuation (same as in 2021). The company, is used by the likes of Samsung, American Express and Coinbase,  to provide various financial services to their customers. More here ->

Ivy, an API for instant bank payments, raised €7m in seed funding. Ivy’s solution is to allow merchants to accept instant bank payments literally at the checkout. That means the “middle-men” transaction fees can be substantially reduced. More here ->

U Fintech Hub, a South Korean remittances company, raised $4m. At the heart of U Fintech Hub’s operations lies Utransfer, a global remittance platform that caters to both B2B and C2C markets. More here ->

Mattilda, a Mexico City-based collections and payments platform for private schools, raised $19m in Series A funding. The company offers an end-to-end collections management platform for schools and to provide a variety of payment options, from WhatsApp links to bank transfers to cash, for parents who often pay monthly. More here ->

Investtech

House Numbers, a Sparks, Nev.-based wealth management platform for homeowners, raised $3.75m seed funding. House Numbers provides an AI-enabled home wealth management platform helping homeowners gain financial independence through AI-tailored home equity-based product recommendations.  More here ->

OneAdvisory, a Miami-based wealth tech startup, raised $4.3m in seed funding. More here ->

Roi, a New York-based investing app, raised $3.6m. The app tracks crypto and NFTs alongside traditional holdings. More here ->

MerQube, an SF-based financial indexing platform, raised $22m in Series B funding.  They design and calculate a wide range of indices, covering equities, multi-asset, futures and options. More here ->

Crypto / Web3

Narval, a Paris-based web3 wallet governance platform, raised $4m in seed funding.  More here ->

Insuretech

Sigo Seguros, an Austin, Texas-based insurtech startup for immigrants, raised $5.1m in pre-Series A funding.  Sigo Seguros is an insurtech company that focuses on providing auto insurance services for immigrant and working-class communities, particularly the Latino and Spanish-speaking population through a mobile app and web portal, which offers transparent pricing, customer service, and a bilingual end-to-end experience.More here ->

Hepster, a leading embedded insurance startup, has raised $11 million in its latest funding drive and has emerged as a key player in the rapidly advancing insurtech landscape. More here ->

Qover, a Brussels-based embedded insurance startup, raised $30m in Series C funding. Qover's platform can integrate with any insurer or broker, and also has partnerships with Revolut, Qonto, IN and Monese. Monzo became its latest customer this week to offer its premium users a new way to track and submit insurance claims within the Monzo app. More here ->

From the Stash

SVB Financial Group has sued the FDIC - to recover $1.9b in cash.  More here ->

Zurich Announces Strategic Partnership with Embedded Solutions Insurtech Qover - Zurich Insurance Group (Zurich) has announced a strategic partnership with Qover, an insurtech based in Belgium, as part of its efforts to expand its embedded insurance capabilities.  More here ->

Qover Partners with Monzo to Bring Seamless Insurance Experience - Qover has announced its partnership with Monzo to offer Premium users in the UK a new way to track and submit insurance claims within the Monzo app, making the insurance experience for its embedded travel protection seamless and user-friendly. More here ->

The checking account war is over — and the fintechs have won. More here ->

Farmers Withdraws from Florida, Citing Risk Exposure in Hurricane-Prone State - Farmers Insurance, a major property insurer, has made the decision to cease offering its policies in Florida. This move will affect home, auto, and umbrella policies, forcing thousands of individuals to find alternative insurance providers. More here ->

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