FIS acquires, and Better.com lays off

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Consolidation continues in the world of fintech

Last week ended with a couple of significant news events in the fintech world. First up, Ingrid and I wrote about FIS acquiring banking-as-a-service startup Bond for an undisclosed amount. (Fintech Business Weekly’s Jason Mikula initially broke the news). The deal is both an example of the resilience of infrastructure in the fintech space and a year that is proving to be filled with consolidation – as expected in a no-IPO, less capital rich environment. 

Earlier this year, Marqeta acquired financial infrastructure startup Power Finance in a $275 million deal. JPMorgan closed its acquisition of Aumni. And Brazilian fintech infra company Pismo is said to be in the midst of being courted by the likes of Visa and Mastercard in a reported $1 billion transaction.

As Ingrid pointed out, not every M&A deal works out well, of course, with the biggest often being the hardest to digest. FIS made one of the largest-ever acquisitions in the world of payments when it acquired WorldPay for about $43 billion in 2019. That deal never really came up trumps, though. In February of this year, FIS confirmed that it would be spinning WorldPay off.

I also wrote about Better.com’s laying off its real estate team and the related shedding of its real estate business unit – a move that we knew was coming, but just didn’t know when. The company reportedly bet big on real estate in 2022, presumably before the housing market turned and mortgage interest rates soared. But as the refinancing market dried up and fewer people wanted to lose their lower interest rates by buying another home in a tight market, the unit was negatively impacted. The company declined to comment on the move but one person (who wished to remain anonymous) who was affected by the layoffs told TechCrunch via email on June 8: “At 8AM yesterday, after being praised in Tuesday’s meeting, our computers where disconnected and logged out of work emails. No warning.” Guess Better.com hasn’t learned from its past experiences of botching layoffs. – Mary Ann

FedNow set to launch

As you may recall, the imploding of banks, like Silicon Valley Bank and First Republic Bank, shed a lot of light on payment rails, and the Federal Reserve’s new FedNow Service, set to launch in July, is being referenced as something that will ease some of the pain being felt by legacy payment rails. 

The Fed suggests that FedNow, an instant payment infrastructure, will be a faster payment rail for financial institutions, offering real-time, 24/7, every day of the year with immediate access to funds. Even investors are keen on it.

This week, we saw some movements related to FedNow. First, TX Zhuo, managing partner of Fika Ventures, noted that “FedNow presents both compelling opportunities and potentially complex challenges,” and many of the effects will be something we can see as early as next year. Zhuo points to one of the immediate opportunities being risk management, especially with the incidences of fraud and scams we read about each day. Read more.

The other has to do with companies working to integrate FedNow. Global digital transformation company GFT is drawing on its experience with Pix in Brazil and the Universal Digital Payments Network to provide a three-part approach for banks. GFT developed architecture and compliance measures so that banks can scale transaction volume and no longer be dependent on closed, third-party services for instant payments.

To illustrate the potential for FedNow, Brazilian instant payments Matera released a report in May highlighting how well Pix is doing in Brazil. Notably, in 12 months, Pix reached 100 million users and 24 billion transactions were made in 2022, with nearly 3 billion transactions made just in December 2022. – Christine

Weekly News

Affirm has become the first buy now, pay later player to be added to Amazon Pay, the two companies announced on June 7. As part of the new partnership, any Amazon Pay merchants in the U.S. can now choose to offer their customers the option to “buy now, pay later” using Affirm’s technology. Affirm first announced an initial partnership with Amazon in August of 2021, which was exclusive through January of 2023. The news gave Affirm’s stock a much-needed boost. Shares had closed at $15.82 on June 6, the day before the announcement came out. By Friday late morning, they were trading at $18.32 after having shot up as high as $19.58 – up 15.8%. More on the news here.

As reported by Sarah Perez, Apple on June 7 “two significant changes to Apple Wallet among a handful of other updates that didn’t make the keynote address last Monday, which kicked off the start of its Worldwide Developers Conference. With the launch of iOS 17 this fall, Apple says users will be able to set up recurring payments with Apple Cash — handy for regular expenses, like rent, or for parents paying kids’ allowances, for example. In addition, Apple is announcing a new system that will allow businesses to accept IDs stored in Apple Wallet.” More here.

Anthemis Group announced last week that it has named Harry Harrison CEO of Anthemis Asset Management. Besides being the husband to Anthemis Group founder and CEO Amy Nauiokas, Harrison is the former head of Barclays Non-Core in London. The fintech-focused venture capital firm has been in the news several times in recent months. In May, TechCrunch reported that Anthemis Group is trying to raise $200 million for a third fund, according to an SEC filing. That new fundraising filing came just months after Anthemis laid off 16 people, or 28% of its staff, as reported by TechCrunch in April. At that time, a spokesperson for London-based Anthemis told TechCrunch that the move was an effort “to better reflect current market conditions and to set up the business for future growth” against its “strategic priorities.”

In a TechCrunch+ guest post, Healy Jones, who runs financial planning and analysis for Kruze Consulting, analyzed revenue, spending and runway data from 2021 and 2022 for over 700 startup clients to find out just how well certain industries were doing, including fintech. We won’t spoil the whole thing, however, we will note that the data confirms some things we’ve seen in the fintech industry in the past year, including growth among startups was doing well until the third quarter of 2022, “suggesting that the collapse of the cryptocurrency market severely impacted fintech sector revenues.” Read more.

Spotted on Twitter: Nik Milanovic, general partner at The Fintech Fund, tweeted “Impressive to see three UK neobanks – @monzo, @StarlingBank, and @tandem_bank – all turn a corner and declare profitability last week.” Catch our recent coverage of how well Monzo and Starling Bank have been doing.  

According to Capterra’s 2023 Accounting and AI Survey of 317 business leaders, “51% of SMBs say AI and ML will fundamentally change business finance operations for the foreseeable future, and 76% of businesses have adopted at least one form of AI or ML technology to handle accounting and finance needs.” More here.

Other headlines

Plaid unveils new identity verification experience The company first expanded into identity (and income) verification in April 2022, a move that we reported on here

Human Interest: Can $250 get you to start saving for retirement?   TechCrunch reported on BlackRock acquiring a minority stake in Human Interest earlier this year here.

Fed, FDIC, OCC update guidance on third-party risk management

Andreessen Horowitz merges fintech and consumer teams after some bets fizzle

Wealthfront introduces automated bond portfolio

Breef adds payment infrastructure to B2B marketplace for agencies

Valyant AI and Paerpay team to bring AI, contactless payments, to the drive-thru

ForwardAI launches B2B platform that enables real-time payments

Glue42 and Finsemble merge, reshaping interop vendor landscape

Fintech firm Nium plans U.S. IPO in 2 years, CEO says

Fundings and M&A

Seen in TechCrunch

Mosaic raises $26M to help inform companies’ financial decisions

Insify raises another $10.7 million for its business insurance startup

Bonside launches with $4.35M to provide growth capital to brick-and-mortar businesses

Payrails banks $14.4M for its OS for complex payments flows

Life insurance startup Getlife becomes Life5 and raises $10.7M

Eric Schmidt backs Keeta, a startup working to make cross-border payments ‘as easy as Venmo’

And elsewhere

Banking-as-a-service fintech Griffin just raised $13.5 million

B2B payments platform Sprinque adds €20 million bounce to its step

Swiss lender Teylor secures up to €275 million to support more than 500 SMEs through its credit platform