Parterre–J. W. Wood (1936) by Meyer Goldbaum and William Merklin.

3 Fintech News Stories

#1: Where Will Corporate Banking Go Next?  

What happened?

Rho announced the addition of expense management capabilities to its platform:

Corporate spend and cash management company Rho announced that it is adding expense management to its offerings with “custom controls designed to make expenses less painful.”

Via email, the company told me it believes that “offering the full suite” is crucial in the world of fintech today. Specifically, a spokesperson said: “When looking at the landscape, there are ten different providers for every individual process: spend management (ex. Brex), expenses (ex. Expensify), and banking services (ex. Mercury). Cobbling together different platforms for these separate functions creates friction for finance users. Rho believes in the power of integrating spend management and business banking services. Each corporate finance process — AP, commercial banking, spend management/cards, treasury management — works better when they work together in a single, connected view.”

So what?

I never would have predicted that corporate banking would become the single most intensely competitive space within financial services, but here we are.

With this move, Rho is becoming a direct competitor to Ramp (corporate cards, spend & expense management) and Brex (corporate cards, business banking, spend & expense management) and moving a little away from fintech business banks like Mercury.

Eventually, I’m guessing that every company in this space will offer corporate cards, business banking, spend & expense management, and treasury management & venture debt (which Mercury currently offers). The convergence in product features feels inevitable.

My question – what happens then? 

#2: Quietly Hedging

What happened?

SoFi launched an ETF focused on NFTs, blockchain technology and the metaverse:

The SoFi Web 3 ETF (TWEB) tracks the SoFi Solactive ARTIS Web 3.0 Index and carries an expense ratio of 59 basis points. It is set to invest in 40 securities related to tokenization, blockchain technology, the metaverse, big data and artificial intelligence.

A move that it frames as a response to growing interest from its members:

Over the last year, SoFi has seen 500,000 people visit its “Crypto for Beginners Guide” since it launched last year, according to the firm. Traffic to the company’s invest pages is up 39% year over year. 

So what?

This is a tough one.

The value of web3, as a retail investment category, is really more narrative than financial at this moment. 

What you want to do, in an ideal world, is acquire customers’ who are abstractly interested in crypto and web3 while, at the same time, doing what you can to quietly hedge their actual investments in crypto and web3 companies so that they don’t lose their shirts.

Related, I just love these two sentences from the article linked above:    

Top holdings in the index — determined in part by algorithmically scanning companies’ online financial reports for relevant keywords — include Albert, Alphabet, Amazon, Ceva and Exscientia.

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The fund also invests in more crypto-focused firms, such as Coinbase and Galaxy Digital, as well as bitcoin miners such as Argo Blockchain, Hive Blockchain Technologies, Marathon Digital Holdings and Riot Blockchain. 

This is perfect. None of the top holdings have anything to do with crypto or web3, but the fund does also invest in some crypto and web3 companies. It’s like the inverse of my daily smoothie – a majority of delicious fruits and yogurts, masking a small amount of unappealing but healthy leafy greens.  

#3: A New Pattern for American Express

What happened?

American Express partnered with WebBank:

WebBank announced today an agreement with American Express to become a card issuer and participant in the American Express network.

The collaboration allows WebBank to issue credit card and payment solutions that include American Express benefits. American Express selected WebBank as one of its key issuing banks focused on the fintech industry.

So what?

Earlier this month I wrote about American Express’s partnership with Cardless, a fintech issuer of co-brand credit cards, which enabled Cardless to issue American Express cards for their clients.

It was an unusual move, as AmEx has historically focused almost entirely on issuing its own cards and reaping the full benefits of controlling both sides of the payment transaction.

I was curious to see if this was a one-off thing or the beginning of a larger trend.

Well, I guess I have my answer.

American Express is clearly trying to broaden the footprint of its cardholder base (at the expense of some revenue it typically generates as an issuer) and it is using fintech partnerships to do it. 

2 Fintech Content Recommendations

#1: A Fintech Market Map (by Medha Agarwal, Redpoint Ventures)

Medha writes some of the very best fintech analysis out there and this market map and overview of the fintech ecosystem is one of my favorites. The reason I like it so much is that it’s simple. There are 10 million different ways to organize and think about the fintech industry (trust me, I’ve tried quite a few of them), but this one opts for simplicity and it works. It’s not perfectly comprehensive (again, trust me, that’s impossible), but it’s clear and that is a gift. 

#2: Fintech Law TL;DR – Aug 19 (by Reggie Young, Lithic)

The award for the best take on the Tornado Cash situation goes to Reggie. His analysis is nuanced and very fair. This part, in particular, jumped out to me:

blockchains like bitcoin’s exchanged privacy for anonymity. Transactions aren’t private, but users can be anonymous. Contrast that with your bank account where transactions aren’t publicly viewable, but have to give your identity to the bank.

Additionally, Reggie’s commentary on the Digit/CFPB news (which I also wrote about recently) is excellent.

1 Question to Ponder

Who will be the winners and losers, among banks and fintech companies, in a rising rate environment?

If you have thoughts on this question, please hit me up on LinkedIn or Twitter.

Alex Johnson
Alex Johnson
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