Where we are
Aion Financial Technologies, Inc.
75 E Santa Clara St., Suite 900
San Jose, CA 95113
75 E Santa Clara St., Suite 900
San Jose, CA 95113
“It will be appropriate to cut rates at such time as inflation is coming down really significantly. And again, we’re talking about a couple of years out.” - Fed Chairman Jerome Powell
After ten straight interest rate hikes, Fed officials left interest rates unchanged at the mid-June meeting. However, it’s too soon to break out the champagne as policymakers expect to resume their hawkish policy sooner than later.
Meanwhile, Fed Chairman Jerome Powell revealed that the pendulum isn’t set to swing to rate cuts anytime soon as inflation continues to miss the central bank’s 2% target. High- interest rates can be a tailwind for fintech companies thanks to stronger interest-based income. Meanwhile, consumers can take advantage of the trend of high-yield savings accounts.
Image by the WSJ/Twitter
Dallas-based finance app ONE has gotten on the high-yield savings account bandwagon. The fintech, which is backed by Wal-Mart, has reportedly introduced a savings account product that yields 5% up on balances of $100,000 or less. Eligible customers must receive a minimum direct deposit of $500 in the prior month, carry a balance of $5,000 or participate in automated withdrawals for savings.
According to Affirm CEO Max Levchin, the consumer is in good shape. He told Yahoo Finance that consumers are “still well employed” and the economy is showing signs of improvement. One major catalyst has been relief on the inflation front, as consumer prices increased just 0.1% in May vs. April levels. On a year-over-year basis, inflation rose 4% vs. a 4.9% jump in April. Separately, Affirm’s stock soared 10% last week after the company announced a partnership with Amazon for BNPL services.
Image by Twitter & Affirm Chief Max Levchin
Zepz, a London-based digital payments company, has set its sight on M&A in a bid to better compete with payments behemoth PayPal, according to CEO Mark Lenhard cited by CNBC. The company is behind the WorldRemit and Sendwave brands and shrunk its workforce by more than 25% earlier this year as it seeks to consolidate its business. Lenhard said that the beat-up valuations among privately held fintechs make it a good time to hunt deals. Zepz is targeting full-year profitability by the end of this year.
Tech-heavy exchange operator Nasdaq is making an acquisition in fintech. Nasdaq has unveiled plans to purchase software company Adenza, whose solutions are used by brokerages and financial institutions, from PE firm Thoma Bravo. The exchange is reportedly paying a steep price for the deal, at $10.5 billion, causing shares in the company to spiral lower by 10%. Analysts say they have reservations about the price tag on the deal.
London-based payments fintech Apron has attracted $5.5 million to its coffers in a seed-funding round. Bessemer Venture Partners led the round, with participation from Melio and Klarna founders. Apron will direct the proceeds toward hiring and products.
Over in Ireland, Dublin-based Wayflyer, a financing solutions company for the e-commerce sector, renewed a $300 million debt line with JPMorgan. Wayflyer, which has a major focus on the U.S. market, said that the market dynamics have shifted since the collapse of Silicon Valley Bank, with the focus now on the company’s funding base while before it was more about pricing. Wayflyer, which has been raising debt and equity from JPMorgan and Credit Suisse since last year, was valued at approximately $1,6 billion at last check.
Payments giant Visa is reportedly close to a deal to acquire Brazil-based payments company Pismo. The Brazilian fintech specializes in cloud-based payments and banking services. Mastercard was also in the running to buy Pismo as the card companies look to strengthen their fintech capabilities in the Latin American region. Pismo is behind a technology that helps companies roll out their own payment cards and related products.
Fintech entrepreneur Jack Dorsey wants to build a “truly global payment protocol for the internet,” but tech giant Apple isn’t making it easy. Damus, a social messaging app backed by Dorsey, revealed that it had to remove a payments-related feature on its posts after Apple deemed it “selling digital content.” Dorsey was quick to weigh in, telling Apple that it’s assessment was “incorrect” and that “tipping on posts” is mere feedback, not selling.
Image by Twitter
A fintech exec at investment bank Goldman Sachs will be gone for a while. Stephanie Cohen, who heads up the firm’s fintech division dubbed Platform Solutions, will reportedly be taking a leave of absence to attend to family matters. Goldman Treasurer Ericka Leslie will take on Cohen’s duties in the meantime. Cohen is one of only a handful of female execs at the firm to spearhead a major business division.
Stephanie Cohen | Image by Reuters
SoFi: SoFi stock is taking investors on a roller coaster ride. After rising above $10 per share in June, shares have since retreated to the $9 area. The stock went on a tear this month, rising for nine straight days. However, investors are taking some profits now that Oppenheimer analysts downgraded shares from “outperform” to “perform” due to the stock’s lofty valuation. SoFi is poised to benefit when student loan payments resume later this year.
SoFi 30-day chart by TradingView
____________________________________________________________
With the second quarter of the year almost in the rear-view mirror, it won’t be long before earnings season rolls around once again. While the economy has avoided a recession, there are still signs of a slowdown. Citigroup has just warned that its recent wave of layoffs has catapulted its expenses by $400 million in Q2. Fintech has been resilient so far in 2023, but investors will be watching for any changes to outlooks for the second half of the year.
It’s a tough market for startups of all kinds, fintechs included, as capital becomes more expensive and difficult to obtain. Fintech lending and payments startup Plastiq is a case study in what can go wrong after the company filed for bankruptcy protection last month.
With so much uncertainty looming in the economy, financial services and technology might want to keep their noses down until all the uncertainty passes them by.
